Industrial output growth slips to 2.7% in April, dragged by mining, power sectors

New Delhi: India’s industrial production growth slipped to an eight-month low to 2.7 per cent in April dragged by poor performance of core sectors, especially electricity and mining, as per official data released on Wednesday.

Electricity output growth slumped to 1.1 per cent in April from 6.3 per cent recorded in the previous month. Mining production contracted by 0.2 per cent year-on-year in April from an expansion of 0.4 per cent recorded in March, data released by the Ministry of Statistics & Programme Implementation showed.

The factory output growth measured in terms of the Index of Industrial Production (IIP) was revised upward to 3.9 per cent from March from 3 per cent reported last month as part of the quick estimate.

Manufacturing, which has the highest weight in the Index of Industrial Production (IIP), posted a growth of 3.4 per cent in April as against 3 per cent recorded in the previous month.

“The extent of the dip was much lower than expectations given the slump in the core sector growth, suggesting that the non-core portion of the IIP witnessed a relatively healthier growth in the month,” said Aditi Nayar, Chief Economist at ICRA.

The slowdown, albeit mild, was broad-based driven by a weaker performance across all the three production sectors. However, the performance of the use-based sectors was mixed, with three of the six witnessing an improvement including capital goods, intermediate goods, and consumer non-durables.

Capital goods output growth surged to an 18-month high of 20.3 per cent in April, signaling improved investment activity in the economy. The consumer durables output remained steady at 6.4 per cent, while the growth in intermediate goods output improved to a three-month high of 4.1 per cent during the month under review.

Paras Jasrai, Associate Director at India Ratings and Research, said electricity production was likely affected due to unseasonal rains. “The daily power generation fell 4.1 per cent yoy as of May 27, due to lower-than-normal temperatures resulting in a plausible contraction in electricity output in May 2025,” said Jasrai.

The unseasonal rains could also impact the construction goods output. This along with an unfavourable base effect (May 2024: 6.3 per cent yoy) would keep the factory output growth under 2 per cent in May 2025, he added.

“Electricity demand will remain soft in May as well due to cooler weather from the early onset of monsoons,” said Dharmakirti Joshi, Chief Economist, Crisil.

According to Joshi, US tariff policy remains a downside risk to industrial outlook. As of now, the pause on US reciprocal tariff hike provides temporary relief, but the 10 per cent universal tariff hike by the US remains in force since April.

“The anticipated tariff hikes after June, coupled with slower global growth are likely to hit export demand. The anticipated India-US trade deal remains a monitorable,” Joshi said.

On the positive side, Chief Economist at CareEdge Ratings Rajani Sinha, said there is the expectation of a further rate cut by the Reserve Bank of India (RBI), which would support industrial growth.