Mint Quick Edit | Industrial growth: A modest start
Data for April from India’s index of industrial production doesn’t offer much cause for cheer. Cheaper credit may help only on the margin, although relief from global trade uncertainty might help set the factory sector abuzz.
Going by the latest industrial production data, India’s economy hasn’t had a great start to the new fiscal year. Growth in output, as measured by the index of industrial production, slowed in April to 2.7% on the base of a year earlier, down from 3.9% in March. Mining output fell last month, while electricity generation grew by only 1.1%. What held up overall production was manufacturing, which saw output rise 3.4%.
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Thankfully, the capital goods segment outperformed, with its output climbing 20.3% in April, even if this was on a low statistical base.
Overall, the assembly lines of Indian factories still seem to be rolling too slowly. Economic conditions have broadly been favourable, with moderation in inflation making space for the central bank to lower the cost of borrowing.
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But then, the supply side story isn’t all there is to it. There is also demand, which needs to strengthen. This year’s budget features a consumption stimulus for taxpayers, which could make a difference on that score.
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What would really help boost Indian industrial activity, though, would be relief from uncertainty over world trade. For India to emerge as a global manufacturing hub, that’s an important factor.
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