India’s industrial production in October grew a mere 0.4%, marking a 14-month low and signaling a slowdown in economic activity. This is significantly below September’s 4% growth and also under the 3.1% forecasted by economists in a Reuters poll.
The modest rise in output came despite stronger domestic consumption across major categories, partly driven by the goods and services tax (GST) cuts implemented on September 22. The Ministry of Statistics & Programme Implementation attributed the slowdown to fewer working days due to festivals like Dussehra and Deepawali.
Breaking down the sectors, manufacturing output increased just 1.8% in October compared with 4.8% in September, while mining and electricity declined 1.8% and 6.9%, respectively. These three sectors together account for a significant portion of the IIP, which tracks short-term industrial production changes, with eight core industries contributing 40% of the index.
Economists, including Dipti Deshpande of Crisil, note that strong consumption, robust rural incomes, low inflation, tax relief, and reduced interest rates may support the manufacturing sector, even as the government moderates capital expenditure to meet fiscal targets.