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Indian Express
30-06-2025
- Business
- Indian Express
May factory output growth drops to 9-month low as rains hit power demand
Growth in India's factory output fell to a nine-month low in May as cooler temperatures due to rains drove down demand for electricity, with mining output also affected. According to data released on Monday by the Ministry of Statistics and Programme Implementation (MoSPI), industrial growth as measured by the Index of Industrial Production (IIP) declined to 1.2 per cent in May, down from 2.6 per cent in April and 6.3 per cent in May 2024. Production of electricity was down 5.8 per cent year-on-year in May – the first time it was down on a year-on-year basis since August 2024. In fact, the year-on-year fall in electricity generation in May was the most since June 2020, when much of the country had come to a halt due to the coronavirus pandemic. The decline in electricity output in May can be attributed to the early onset of the southwest monsoon, which made landfall on May 24, the earliest it has done so since 2009. Along with electricity, mining output also declined in May, albeit by a marginal 0.1 per cent. In April, it had declined by 0.2 per cent. Rains affect mining activities. Meanwhile, manufacturing sector output – which makes up more than three-fourth of the IIP – rose by 2.6 per cent year-on-year, down from 3.1 per cent in April and 5.1 per cent in May 2024. Consumer weakness According to the latest statistics ministry data, production of consumer goods was lower in May compared to a year ago. While output of non-durable goods fell 2.4 per cent – down for the fifth time in six months – that of durable goods was 0.7 per cent lower. This is the first time in one-and-a-half years that production of consumer durable goods has fallen on a year-on-year basis. According to Paras Jasrai, Associate Director and Economist at India Ratings & Research, the contraction in non-durable goods' output in May 'points to weak goods consumption by households'. Output of primary goods also fell in May and was down 1.9 per cent after having posted a 0.2 per cent fall in April. However, growth in capital goods output was in the double-digit territory in May for the second month in a row, following up a 14 per cent growth in April with a 14.1 per cent increase, indicating 'sustained progression in investment activity in the economy', Jasrai said. According to data on the government's finances, also released on Monday, the Centre's capital expenditure in May was up 39 per cent year-on-year at Rs 61,564 crore. For April-May, the Indian government's capex was up 54 per cent from last year at Rs 2.21 lakh crore. Production of intermediate and infrastructure goods was up 3.5 per cent and 6.3 per cent, respectively. In April, output of intermediate goods had increased by 3.5 per cent, while that of infrastructure goods had risen 4.7 per cent. 'Overall, use-based data and manufacturing IP sectoral data shows capital-intensive sectors (metals, machinery, auto, construction) continue to outperform, while consumer durables and non-durables output remains subdued, pointing towards limited impulses from private consumption,' Barclays economists Aastha Gudwani and Amruta Ghare said in a note. A decline in industrial growth in May was expected due to the early rains, with commerce ministry data released on June 20 showing core sector output – which accounts for 40 per cent of the IIP – had increased by a mere 0.7 per cent in May, the least in nine months. Core sector data – which includes sectors such as coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity – is seen as a leading indicator of industrial activity in the country. For the first two months of 2025-26, IIP growth clocked in at 1.8 per cent, less than a third of the 5.7 per cent increase posted in April-May 2024. Looking ahead, industrial growth is seen subdued, with daily data showing power generated in June was down 2.1 per cent as of June 29. 'This may keep the factory output growth around 1.5% yoy (year-on-year) in June 2025, in Ind-Ra's view,' Jasrai said. IIP data for June will be released on July 28. Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy. ... Read More
Indian Express
12-06-2025
- Business
- Indian Express
Fall in food prices pulls down May CPI inflation to 2.82%, lowest since Feb 2019
A fall in prices of fruits, pulses, and cereals helped lower India's headline retail inflation rate to a 75-month low of 2.82 per cent in May 2025, acording to data released on Thursday by the Ministry of Statistics and Programme Implementation (MoSPI), possibly providing some more easing room to the Reserve Bank of India (RBI). At 2.82 per cent, the latest inflation rate based on the Consumer Price Index (CPI) was somewhat lower than economists' expectations of around 3 per cent. CPI inflation stood at 3.16 per cent in April 2025 and 4.80 per cent in May 2024. The last time retail inflation was lower was in February 2019, when it stood at 2.57 per cent. Per MoSPI data, food inflation as measured by the Consumer Food Price Index (CFPI) almost halved to a 43-month low of 0.99 per cent last month from 1.78 per cent in April 2025 as fruit prices declined by 2 per cent month-on-month (m-o-m) while those of pulses were down 1.7 per cent. Cereals also helped to bring down the overall food inflation in May 2025, with prices down 0.6 per cent compared to the previous month. Prices of vegetables, meanwhile, inched up slightly last month from April 2025. However, in year-on-year (y-o-y) terms, retail prices of vegetables were down 13.7 per cent — the sharpest pace of decline since December 2022, according to Paras Jasrai, associate director and economist at India Ratings & Research. Proteins became more expensive on a sequential basis in May 2025. While the price of meat and fish was up 1.5 per cent m-o-m, egg prices rose 2.5 per cent and milk turned 0.7 per cent more expensive in May. Core inflation — which excludes items whose prices are volatile such as food and fuel and is seen as an indicator of underlying demand conditions — inched up to around 4.2 per cent, according to calculations done by The Indian Express. The steady rise in core inflation over the last year-and-a-half or so is suggestive of 'steady demand conditions' in the economy, said Jasrai of India Ratings. In terms of the regional break-up, urban inflation eased to 3.07 per cent in May 2025 from 3.36 per cent the previous month, while rural CPI inflation declined to 2.59 per cent from 2.92 per cent. Inflation in May 2025 was highest in Kerala at 6.46 per cent, while it was lowest in Telangana, at 0.55 per cent. According to Sujan Hajra, chief economist at Anand Rathi Group, the downward trend in CPI inflation is expected to continue through October 2025, with averaging for FY26 likely to undershoot the RBI's latest forecast of 3.7 per cent. ICRA Chief Economist, Aditi Nayar, expects retail inflation to decline further to around 2.5 per cent in June 2025 and average 3.5 per cent in FY26. 'Looking ahead, on a y-o-y (year-on-year) basis, as many as 17 of the 22 food items for which the daily data is released, recorded a lower y-o-y inflation in June 2025 (until June 10, 2025) vis-à-vis May 2025, barring most edible oils and tea,' Nayar said. 'Moreover, the GoI (Government of India) has reduced the import duty on edible oils effective end-May 2025, which would lead to a softening in prices going forward, thereby auguring well for the oils and fats inflation readings through the fiscal, which would also be suppressed by a high base.' Rajani Sinha, chief economist at CareEdge, said that while the India Meteorological Department's forecast of an above-normal monsoon reinforces the favourable outlook for food inflation, the spatial and temporal distribution of the rains will be critical. 'Despite the early onset, monsoon activity has slowed, although it remains early in the season, with potential for recovery in the coming weeks. Weather-related risks will need close monitoring,' Sinha added. While the RBI's Monetary Policy Committee (MPC) last week cut the policy repo rate by an unexpectedly large 50 basis points (bps) to 5.50 per cent, it also tightened the stance of its policy to 'neutral' from 'accommodative', arguing that 'monetary policy is left with very limited space to support growth'. However, economists see the space for more one rate cut from the MPC, although not at the committee's next meeting in August 2025. Jasrai of India Ratings, for instance, expects a status quo on interest rates in August 2025 considering inflation is heading for the RBI's forecast of 2.9 per cent for April-June 2025 and the monetary easing affected so far. 'We expect, at max one more 25 bps cut this fiscal, unless there are surprises from global development or growth declines sharply,' Jasrai said. On Tuesday, the World Bank lowered its global growth forecast for 2025 to 2.3 per cent from its January 2025 prediction of 2.7 per cent citing 'heightened trade tensions and policy uncertainty'. Growth in 2026 is expected to pick up only slightly to 2.4 per cent and further to 2.6 per cent in 2027. While a global recession is not expected, the World Bank's latest projections for the next two years, should they turn out as forecast, would mean average global growth in the first seven years of the 2020s will be the slowest of any decade since the 1960s, it said. Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy. ... Read More
The Hindu
26-05-2025
- Business
- The Hindu
Tamil Nadu's capital expenditure grew over 16% in fiscal 2025
Tamil Nadu's capital expenditure grew over 16% to ₹46,076.54 crore in fiscal 2025, when compared to ₹39,540.90 crore in fiscal 2024, according to the preliminary un-audited provisional figures from the Comptroller and Auditor General of India (CAG). Capital expenditure (capex) goes towards creation of fixed assets, such as roads and bridges, irrigation structures, schools, hospitals, along with investments made in Public Sector Undertakings. It helps in improving economic activity and generating employment. The capital expenditure for fiscal 2025 is also in line with the projection made in the revised estimates. The overall Capital Expenditure in the Revised Estimates was projected at ₹46,766 crore, as compared to ₹47,681 crore in the initial Budget Estimates for 2024-25, as per the State Budget for 2025-2026. 'The 16% growth in fiscal 2025 indicates a sustained focus on capex by the State government. The capex growth achieved in fiscal 25 provisional is much better than the compounded annual growth rate (CAGR) of 12.3% during fiscal 2018-2024,' Paras Jasrai, associate director, India Ratings & Research, said. He said this is a positive development. 'In fact, a better way to look at it is comparing the actual overall capex (including loans and advances) as a proportion of the budgeted numbers. A closer look at the data reveals that Tamil Nadu has met 95.2% of the budgeted target in fiscal 2025, which is much better than fiscal 2024 number of 86.2% and 95.4% in fiscal 2023, as well as the average of 88.1% during FY18-FY24,' Mr. Jasrai said. According to him, the State has also fared better in terms of quality of expenditure. The quality of expenditure can be gauged by capital outlay to total expenditure (COTE). The COTE stood at 12.2% in fiscal 2025 provisional numbers and has hit a three-year high (it was 12.6% in fiscal 2022), Mr. Jasrai said. The metric for fiscal 2025 provisional is also better than the average of 11.4% during fiscal 2018-fiscal 2024. For fiscal 2026, the State government has estimated capital expenditure of ₹57,231 crore, which is a growth of 22.38% from the revised estimates for fiscal 2025. The total capital outlay of the State, including Net Loans and Advances, is estimated at ₹65,328 crore in the Budget Estimates 2025-26. 'Capex remains a sustained focus for the government, which is quite favourable for the continuing the economic momentum in the state. The State has been actively focusing on fiscal consolidation as evident even in the FY26 budget,' Mr. Jasrai said.
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Business Standard
20-05-2025
- Business
- Business Standard
India's core sector growth plunges to eight-month low of 0.5% in April
Output growth in India's eight core infrastructure industries plummeted to an eight-month low of 0.5 per cent in April from an upwardly revised 4.6 per cent growth recorded in March, with three sectors contracting sharply, including refinery products and fertilisers, while electricity and natural gas clocked very feeble upticks. Base effects also pulled down last month's growth print, as the Index of Core Industries (ICI) had risen a sharp 6.9 per cent in April 2024, which was the joint highest in the past thirteen months. Cement production grew at the fastest pace among the core sectors, rising 6.7 per cent in April, but this was almost half the pace recorded in March and the lowest uptick in six months. Steel output grew 3 per cent and electricity generation rose a mere 1 per cent, the slowest uptick in seven months for both sectors. Coal production rose at a three-month high pace of 3.5 per cent, while natural gas output grew for the first time in ten months, albeit by a fractional 0.4 per cent, according to data released by the Ministry of Commerce and Industry on Tuesday. Crude oil output (-2.8 per cent) contracted for the fourth consecutive month, that economists attributed to low global prices, while output in refinery products contracted for the first time in eight months, with a 4.5 per cent drop that marked the sharpest downturn since November 2022. The eight core sectors constitute 40.27 per cent of the Index of Industrial Production (IIP), which had recorded a mild recovery to rise 3 per cent in March. Economists now expect industrial output growth to drop to around 1 per cent in April. 'The impact of Tariff Tantrums-led unprecedented economic uncertainty along with a high base effect pulled the infrastructure output growth down to be the lowest since August 2024, with six of eight sectors seeing a moderation in growth,' said Paras Jasrai, Associate Director at India Ratings and Research. Jasrai said he expects IIP growth in the range of one to two per cent in April, and core sectors' growth to improve to around 2 per cent in May. Terming the ICI print for April 'quite disappointing', Bank of Baroda chief economist Madan Sabnavis reckoned that IIP growth will be in the range of 1 per cent to 1.5 per cent for last month. Rating agency ICRA said IIP growth could moderate sharply to just around 1 per cent in April, citing the tepid core output numbers and other available high frequency indicators. 'The healthy growth in non-oil exports may provide an upside, unless the same represents round-tripping of some imports,' the firm's chief economist Aditi Nayar noted.
Indian Express
30-04-2025
- Business
- Indian Express
At 6.2%, Delhi records slowest economic growth since 2021-22
Delhi's economic growth slowed down in financial year (FY) 2024-25, with real Gross Domestic Product (GDP) growing by 6.2%, as compared to 9.16% in the previous year, the government's most recent estimates showed. This was the slowest growth recorded by the city since FY 2021-22. The data is part of the Estimates of State Domestic Product 2024-25 released by the Directorate of Economics and Statistics recently. This data is significant since the state Economic Survey, which provides insights into the Capital's financial health and is presented before the Budget, was not released this year. The GDP, the total monetary value of all goods and services produced over a year, serves as a key indicator of the region's economic performance and growth. Advanced estimates are released before the end of a financial year. It is the government's forecast of how the economy will perform based on data gathered up to that period. 'Post-pandemic years saw higher growth because of the base effect… there was very low growth during the Covid-19 pandemic. Now that the base effect is waning, we are seeing growth moderating. Due to inflation inching very high, people are also spending less on discretionary items,' said Paras Jasrai, Associate Director of India Ratings. Delhi 's slowdown is in line with the slowdown India witnessed in the same period — India's growth rate also decelerated from 9.2% to 6.5% in a year. The size of Delhi's economy grew to Rs 7.11 lakh crore last year from Rs 6.69 lakh crore in the previous year. Delhi's per capita income is Rs 4.93 lakh, which grew at 7.32% last year, much slower than the 10.11% it grew at the year before that. In 2011-12, Delhi's per capita income was almost thrice the national average. However, over time, this gap has narrowed with the national average growing at a faster pace. Delhi's per capita income is now around two-and-a-half times higher than India's national average of Rs 2.05 lakh. The deceleration of the growth is primarily driven by the secondary and tertiary sector, the report showed. The tertiary sector, which includes services such as transport, banking, hospitality, and tourism, among others, and contributes close to 85% of Delhi's economy, grew only at 6.5%, as compared to 8.8% the year before that. This sector's growth slowed down the previous year as well, from a high of 10.27% in 2022-23. Within the tertiary sector – transport, storage and communications, and services incidental to transport – have fared particularly badly last year, with their growth rates halving. Growth rate of real estate, ownership of dwellings and professional services, which contributes roughly 30% to Delhi's economy alone, has fallen from 13.3% to 6.2% in the past three financial years. 'After the pandemic, we saw many people buying houses as there was pent up demand. Now, we are seeing overall house sales growth moderating,' Jasrai said. The secondary sector (primarily manufacturing and construction), which contributes roughly 13% to the economy, also witnessed a slowdown from 9.68% in FY 2023-24 to 5.32% in FY 2024-25. Electricity, gas, water supply and other utility services were the segment hit the hardest in the secondary sector, the report showed.
