Growth in India’s industrial production growth moderated to 4.9% YoY in Mar-24 from 5.6% in Feb-24. For FY24, IIP registered a growth of 5.8%, up from 5.3% in FY23

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May 10, 2024

QuantEco Research || Mar-24 IIP - A year marked by a pick-up in recovery

Barring the COVID led distortion in the data series in FY21 and FY22, this is the highest growth in industrial output in the last eleven years. Underneath the strong revival in the headline print, granular data suggests unevenness. At a thematic level, growth in investment-oriented industrial production continued to outpace growth in consumption-oriented industrial production. Notably, both consumer durables and non-durables are yet to regain their pre COVID levels of production. Similarly, within the 22 subcategories within the manufacturing sector in IIP, 10 are yet to regain their pre COVID levels of output. Some of the divergence in industrial recovery is likely to be ironed out by a surplus monsoon season in FY25 amidst the likelihood of a revival in rural consumption demand. Meanwhile, headwinds from monetary policy and regulatory tightening would likely get offset by continued prioritization of public capex and a steady global growth outlook (notwithstanding geopolitical risks). But keep an eye on the swing factor – input price inflation is expected to turn positive in FY25 after being negative in FY24.