The factory output, measured in terms of the Index of Industrial Production (IIP), rose by 5.6 per cent in February 2024.
Credit: Reuters Photo
New Delhi: India’s industrial production growth slipped to a six-month low of 2.9% in February from 5.2% recorded in the previous month, dragged by poor performance of the manufacturing sector, as per official data released on Friday.
Manufacturing, which has the highest weight in the Index of Industrial Production (IIP), posted a sluggish expansion of 2.9% in February compared to 5.5% growth recorded in January.
Mining grew only 1.6%, showing weakness in output from extractive industries. In January it had grown by 4.4%. However, the power sector recorded better performance when compared with the previous month. Electricity production grew by 3.6% in February as compared to 2.4% growth recorded in the previous month, data released by the National Statistics Office (NSO) showed.
“A combination of high base effects along with a slowing growth in mining and manufacturing sectors led to the growth falling in February 2025,” said Paras Jasrai, Associate Director at India Ratings and Research.
Output growth of all the sub-sectors at the use-based level declined in February when compared with the previous month. “This indicates the muted and volatile nature of industrial output growth,” said Jasrai.
Consumer durable output growth fell to a 15-month low of 3.8%. Consumer non-durable remained in a contractionary phase, with the output declining sharply 2.1% in February. This was the third straight month of contraction in the consumer non-durable output.
Overall, it appears that consumption demand has slowed down in February 2025. However, there is light at the end of the tunnel with the substantial easing of food inflation in the recent time period and monetary easing in February and April 2025, the effect of which would be felt with a lag in FY26, Jasrai added.
“Monitoring consumption trends remains crucial due to the ongoing unevenness in the domestic demand landscape. While rural demand has been improving, the lagging urban demand continues to be a cause of concern,” said Rajani Sinha, Chief Economist, CareEdge Ratings.
“Several factors such as robust agricultural production and expectations of a normal monsoon are likely to remain supportive of rural demand. Furthermore, the easing food inflation is a positive for the overall consumption recovery. However, the urban demand scenario must be monitored going forward,” Sinha added.
ICRA Chief Economist Aditi Nayar said the industrial production growth is likely to remain at around 3% in March, the last month of 2024-25 financial year.
"While the growth performance of mining is expected to deteriorate in March relative to February, this is likely to be offset by an uptick in electricity generation, amid steady manufacturing growth," said Nayar.