Factory output slowed in March to expand by 4.9% from a 5.6% grow in February but managed to average a 5.8% growth in the fiscal year 2023-24 as against a slower 5.2% expansion in 2022-23.
According to official data released on Friday on the Index of Industrial Production, all three sectors—mining, manufacturing and electricity generation registered positive growth in March. Manufacturing grew at a five month high at 5.2% in March 2024 and by 5.5% for the full fiscal year 2023-24. Mining grew by a slower 1.2% in March and by 7.5% in the fiscal. Electricity generation expanded by 8.6% in March and grew by 7.1% between April 2023 and March 2024.
Significantly, use based industries indicated a pickup in consumer sentiment with both consumer durable and non durables registering positive growth. Consumer durables grew by 9.5% in March as against 12.37% in February. It expanded by 3.6% in FY24 from 0.6% in FY23. Meanwhile, consumer non-durables grew by 4.9% in March versus a contraction of 3.48% in February. It grew by 4% last fiscal as against a 0.7% expansion in FY23.
“Consumer goods have shown a revival buttressing the feeling of consumption picking up towards the yearend. Both durable and non-durables have done well. This should be sustained as rabi crop is expected to be good and along with wedding season should fuel spending in April and May,” said Madan Sabnavis, Chief Economist at Bank of Baroda. He however, highlighted that negative growth last year has provided the base effect for growth.
“The consumption scenario remained mixed in FY24 with urban demand showing resilience while rural demand continued to lag. However, expectation of a good monsoon, moderating inflation, and signs of pick-up in rural demand are positives for the overall consumption scenario. Thus, a broad-based and durable improvement in consumption remains the key monitorable this fiscal,” said Rajani Sinha, Chief Economist, CareEdge.
She also noted that upbeat performance in the infrastructure and construction goods segment remained supportive of the growth in industrial activity and the agency expects this momentum to continue going forward. Infrastructure or construction grew by 6.9% in March and by 9.6% in FY24.
However, experts believe that growth could slow down in April. Aditi Nayar, Chief Economist, Head Research and Outreach, ICRA said the agency anticipates the YoY IIP growth to decelerate to about 3-4% in that month from 4.9% in March 2024, owing to an adverse base.
