​Growth pangs: On industrial activity   | Current Affairs | Vision IAS

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​Growth pangs: On industrial activity  

2 min read

Industrial Production and Economic Insights for India Fiscal 2025

India’s Index of Industrial Production (IIP) for fiscal 2025 averages at 4%, marking the lowest point in four years, indicating a slowdown in industrial activity.

Key Factors Contributing to the Slowdown

  • Global economic uncertainties impacting goods exports growth.
  • Lower than expected consumption demand growth.
  • A decline in private capital expenditure.

Sectoral Analysis

  • Despite a rise in power production, the overall IIP grew marginally from fiscal 2023-24 to 2024-25.
  • Decline in sector growth from fiscal 2023-24 to 2024-25: 
    • Mining: From 7.5% to 2.9%
    • Manufacturing: From 5.5% to 4%
    • Electricity: From 7% to 5.1%
  • Consumer Non-Durables experienced a negative growth of -1.6% in fiscal 25 compared to 4.1% the previous year.
  • Consumer Durables nearly doubled in growth from 3.6% to 8%, indicating an increase in urban private consumption.

Inflation and Consumption

  • Retail inflation was at a six-year low of 4.6% in FY25, mainly due to reduced vegetable prices.
  • Rural consumption remains strained due to reduced farm incomes and high food inflation in the previous fiscal’s last quarter.

Monetary and Trade Environment

  • The RBI reduced the bank lending rate to 6% in April from 6.5% in January, affecting capex lending rates across banks.
  • Uncertainty in economic and trade environments affects private sector investment without government-led domestic consumption boosts.

Goods Exports and MSME Sector

  • Flat growth in goods exports in FY25 raises concerns for policymakers, impacting India's MSME sector.
  • The MSME sector, which contributes 45.8% to exports, expanded significantly from ₹4 lakh crore in FY21 to ₹12 lakh crore in FY25.
  • India must focus on strengthening the Bilateral Trade Agreement under negotiation with the United States to support MSMEs, which employ over 250 million people.
  • Tags :
  • Index of Industrial Production (IIP)
  • ndustrial Production
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