India's Index of Industrial Production (IIP) growth fell to 4% in FY25, the lowest in four years, showing a slowdown in industrial activity.
Key reasons include weak global demand, lower consumer spending, and reduced private investment.
March’s IIP growth (3%) was mainly due to a seasonal rise in electricity production.
Mining, manufacturing, and electricity sectors all saw lower growth compared to FY24.
Consumer non-durables shrank by -1.6%, indicating rural demand is still weak.
Consumer durables grew from 3.6% to 8%, suggesting stronger urban consumption.
Rural consumption remains under pressure due to earlier high food inflation and falling farm incomes.
Despite lower inflation (4.6%) and a cut in RBI’s lending rate, private sector investment remains cautious.
Flat export growth is hurting small businesses, especially MSMEs, which make up nearly 46% of exports.
India’s MSME sector grew four times in five years but now faces pressure due to weak exports and trade ties.
A strong Bilateral Trade Agreement with the U.S. is key to supporting India’s 60 million MSMEs and the 250 million jobs they sustain.
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