Growth in India’s industrial production rose by 3.8% in Dec-23, from 2.4%YoY in Nov-23.
Download ReportQuantEco Research || Dec-23 IIP - 2023, the year of strength
The Dec-23 IIP print over-delivered on the typical year-end positive seasonality and marked the end of the calendar year with the best India has seen in over a decade (barring post-COVID recovery year of 2021).
Looking ahead, we expect IIP growth to remain subdued in Q4 FY24 as fiscal targets become binding (also revised estimate for capex saw a cutback of Rs 500 bn). For FY25, the growth landscape remains somewhat mixed amidst lagged impact of monetary tightening/regulatory tightening on unsecured lending playing out, expected improvement in rural demand, continuing capex thrust of the Government, but an adverse global backdrop especially amidst recent tensions in Red Sea region, potentially hurting external demand. For FY25, we expect growth in GDP growth to moderate in the range of 6.1-6.3%. The reversal in support from deflationary prices (with WPI expected to move into positive range) enjoyed in FY24, is bound to suppress industrial activity’s contribution to overall headline GDP growth in FY25 (in addition to anticipated normalisation in services demand).