GDP Strong, But Industrial Output Hits 13-Month Low: Here’s Why

New Delhi: India’s GDP grew at a robust 8.2% in the second quarter, yet industrial production in October has fallen to a 13-month low. According to the Ministry of Statistics and Programme Implementation, the Index of Industrial Production (IIP) rose only 0.4% compared to the same month last year, significantly down from October last year’s 3.7% and September’s 4.6% growth.

Weak performance in mining, power, and manufacturing sectors contributed heavily to the slowdown. Manufacturing grew just 1.8%, compared to 4.4% a year ago. Mining output declined by 1.8%, while electricity production dropped 6.9%, compared to a 2% increase last year. Consumer durables such as TVs and refrigerators saw a 0.5% contraction, while consumer non-durables fell 4.4%. For the current financial year up to October, industrial output growth stands at 2.7%, down from 4% last year.

Manufacturing PMI Shows Slowdown
Bank of Baroda’s Chief Economist Madan Sawhney noted that delayed monsoon rains affected mining and power production. Additionally, fewer working days due to festivals impacted industrial activity. The third quarter is expected to be critical as GST cuts and lower income tax rates could boost consumer spending.

The HSBC India Manufacturing Purchasing Managers’ Index (PMI) fell to 55.6 in November from 59.2 in October. Chief India Economist at HSBC, Pranjal Bhandari, stated that sluggish sales and production growth, along with lower new export orders—recording a 13-month low—contributed to the slowdown, partially influenced by U.S. tariffs.

Despite a strong GDP, industrial production’s lag highlights sector-specific challenges that policymakers and businesses will need to address in the coming months.