India’s industrial production growth fell to 2.9% in February, the lowest in 6 months, down from 5.2% in January and 5.6% a year ago.
The drop was broad-based, except for a small rise in power output to 3.6%, which is still less than half of last year’s 7.6%.
Mining growth dropped sharply to 1.6% (from 8.1%) and manufacturing slowed to 2.9% (from 4.9%).
Consumer durables output fell to 3.8% (from 12.6%), and consumer non-durables shrank for the third month by 2.1%, showing weak consumption demand.
This slowdown comes despite falling retail inflation, now at 3.61%, with food inflation at a 2-year low of 3.75%.
Government hopes of a consumption boost from the Maha Kumbh have likely not worked, making it hard to meet the 6.5% GDP growth target for 2025.
The IIP data matches the drop in the manufacturing PMI, which hit a 14-month low at 56.3.
Global uncertainty and Indian stock market volatility have made consumers and manufacturers cautious.
Still, some positive signs exist: 14 of 23 manufacturing sectors showed growth, led by motor vehicles (8.9%), non-metallic minerals (8%), and basic metals (5.8%).
Capital goods output jumped to 8.2%, showing strong investment demand backed by increased government spending.
This growth came even with a ₹1.7 trillion liquidity crunch, which the RBI eased by injecting ₹2.18 trillion using rupee/dollar swaps.
Despite missing its growth target, India remains the fastest growing major economy.
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