Industrial production data released last week shows that the Indian industry posted 4.9 per cent Y-o-Y growth in March this year. This growth rate his, however, less that the 5.7 per cent growth registered in the previous month of February. Notably, IIP clocked 11.9 per cent growth in October 2023, which slipped to 2.5 per cent in November, 4.2 per cent in December and 4.1 per cent in January 2024. It is encouraging to see that the latest data shows healthy growth in manufacturing, capital goods and consumer durables.

Breaking down the numbers, we find that the manufacturing sector-- which is a major contributor to our industrial output and crucial for job generation – has continued to post healthy growth, growing to a five-month high of 5.2 per cent in March against 5 per cent in February. ‘Basic metals'(7.7 per cent), ‘pharmaceuticals, medicinal chemical and botanical products’ (16.7 per cent), and ‘other transport equipment’ (25.4 per cent) were the top three contributors to the sector’s growth in March.

In addition, it is encouraging to see that the March data indicates a pickup in consumer sentiment, with consumer durables growing by 9.5 per cent in March against 12.37 per cent in February. Similarly, non-durables have also done well, growing by 4.9 per cent in March against a contraction of 3.48 per cent in February. Economy watchers point out that this growth is likely to sustain with expectation of good Rabi season ahead.

The capital goods sector posted 6.1 per cent in March, and industry experts point out that this, combined with the consumer durables data, indicates expansion of investment trajectory in the country. While consumer durables growth reflects consumer demand that, in turn, stems from rising incomes and jobs, higher spending by companies to acquire more capital goods is a sign that they will increase production.

I invite your opinions.