India’s industrial production growth accelerated to a 7-month high of 5.9% YoY in May-24 from 5.0% in Apr-24
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Industrial activity continues to post reasonably strong momentum with likelihood of annualized growth in Q1 FY25 exceeding the growth of 4.8% in Q1 FY24. On FYTD basis, investment-oriented industrial production appears to have lost some traction owing to the backdrop of general elections, which is associated with restriction on government’s discretionary spending. Consumption-oriented industrial production, which has been lagging for a considerable time, appears to have caught up amidst anticipation of monsoon-led support. The expectation of steady global growth conditions and likelihood of renewed budgetary focus on rural economy could support industrial activity in FY25. Meanwhile, headwinds from monetary policy and regulatory tightening coupled with geopolitical uncertainty would offset some of the gains.