By-Ms. Rajani Sinha, Chief Economist, CareEdge Ratings on IIP data

“India’s industrial production growth improved to 3% in March from a six-month low of 2.7% in February. The overall improvement was supported by gains in electricity output and manufacturing activities, although a sharp slowdown in mining activity partially weighed on the headline number. Manufacturing may have benefited from inventory accumulation by companies ahead of the anticipated announcement of reciprocal tariffs. For FY25, the IIP growth averaged 4%.

Among key segments, the output of consumer durable goods rose by 6.6% in March, while the output of consumer non-durables contracted for the second consecutive month. Monitoring consumption trends remains critical, given the ongoing unevenness in the domestic demand landscape. While rural demand is showing signs of recovery, lagging urban demand continues to be a concern. Factors such as declining inflation, healthy agricultural activity, lower borrowing costs, and a reduced income tax burden are expected to support consumption demand going forward.

 Among other components, the output of infrastructure/construction goods and intermediate goods grew by 8.8% and 2.3%, respectively. However, growth in capital goods output moderated, largely due to a high base effect from the previous year. While public sector capital expenditure is likely to remain supportive, private sector investment may remain subdued in the coming quarters, weighed down by ongoing global trade policy uncertainties. Looking ahead, it will be critical to monitor global trade dynamics and geopolitical risks, as they could pose downside risks to both private investment and consumption”