India’s industrial output growth decelerated to 3.2% in December 2024, down from 5% in November, as reported by the Index of Industrial Production (IIP). This decline was primarily attributed to a weaker performance in the manufacturing sector, although electricity generation experienced a significant boost. This slowdown raises concerns regarding the overall economic momentum as the country approaches 2025.
What Led to the Slowdown in Industrial Growth?
The slowdown in industrial growth during December was affected by various sector performances. The manufacturing sector, which holds a significant portion of the Index of Industrial Production (IIP), experienced only a 3% growth in December, down from 4.6% in the same month last year. The mining sector also saw a decline, with output increasing by just 2.6%, a stark contrast to the 5.2% growth recorded in the previous year. On a brighter note, electricity generation rose by 6.2%, a notable increase compared to the 1.2% growth seen in December of the previous year.
Which Sectors Were Affected the Most?
The slowdown was uneven across different sectors:
Capital Goods: Investment in capital goods remained strong, registering 10.3% growth, up from 3.7% last year .
Consumer Durables: Demand for consumer durable goods rose by 8.3%, compared to 5.2% in December 2023 .
Consumer Non-Durables: This sector witnessed a sharp contraction of 7.6%, reversing from a 3% growth last year .
