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Indias industrial growth dropped more than expected in September to 5.8% from a 14-month high of 10.3% in the preceding month, hit by an unfavorable base effect magnified by a shift in the festival calendar. Excess rainfall in September also disrupted output, impacting growth.
Industrial growth in India eased to a three-month low of 5.8% in September, down from 10.3% in the previous month, due to excess rainfall and a high base. However, experts suggest that growth is expected to rebound in October, with high-frequency indicators showing improvement.
Investment growth moderated slightly in the economy during the first quarter (Q1) of the current financial year (2023-24, or FY24), notwithstanding the front-loading of capital expenditure (capex) by the Centre. This was also the case despite a pick-up in demand during the period after two dismal consecutive quarters. Although growth in gross fixed capital formation (GFCF), representing investment, fell to a five-quarter low of 7.96 per cent, the comparison with the first two quarters of the previous year is a bit askew due to the low year-on-year (Y-o-Y) base of those periods.
Indias economy expanded 7.8% in the June quarter from a year earlier, accelerating further from the 6.1% growth recorded in the preceding quarter.
India's economy grew at a rate of 7.8% in the June quarter, driven by a recovery in services and an increase in investment. The data also showed an improvement in consumer demand. However, economists expect growth to moderate due to factors such as a below-par monsoon, high inflation, and an adverse global environment. Election spending and festive demand may provide some support to growth.