July 30, 2025

In June, India's industrial output growth settled at 1.5%, the lowest in ten months, primarily influenced by contractions in the mining and electricity sectors. According to the National Statistics Office (NSO), this was a decrease from the revised figure of 1.9% in May and a substantial drop from the 4.9% recorded in the same month last year. In particular, the mining sector experienced a significant contraction of 8.7%, contrasting sharply with a robust growth of 10.3% in June of the previous year. Similarly, the electricity sector felt the downturn, with a decline of 2.6%, a notable difference from last year's increase of 8.6%. On a more positive note, the manufacturing sector displayed resilience with a growth rise of 3.9% in June, surpassing the growth figure of 3.5% from the previous June. Experts pointed to the excessive rainfall during this period as a crucial factor impacting both mining output and electricity generation. Aditi Nayar, chief economist at ratings agency Icra, noted that heavy rains affected mining results, although the contraction in electricity output was less severe than in previous months. Despite these weaknesses, manufacturing output demonstrated an encouraging trend, improving from 3.2% in May to 3.9% in June. The capital goods sector, often indicating overall industrial activity, grew by 3.5% in June, experiencing a slight decrease from 3.6% growth seen in June last year. However, the consumer durables sector reported a deceleration in growth to 2.9%, substantially lower than the impressive 8.8% seen in June of the previous year. Furthermore, the consumer non-durables sector experienced a contraction of 0.4%, a stark contrast to a modest decline of 1% in June the previous year. Economists expressed mixed outlooks regarding future consumer demand. Rajani Sinha, chief economist at ratings agency CareEdge, highlighted that the performance of consumer non-durables remained in the contraction zone for five months, which indicates a trend of weakness in urban consumption. Meanwhile, the consumer durable goods sector showed some signs of improvement. As the industrial landscape continues to evolve amid changing weather patterns and consumer behavior, stakeholders in the economy are keenly observing these trends and implications for future growth.

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Tags: Industrial output, Iip, Mining sector, Electricity generation, Manufacturing growth,