Photo used for representation purpose only.

India’s industrial output growth slumped to a five-month low of 4.2% in June, with manufacturing output growth halving to 2.6% from the previous month, and electricity generation easing 2.8% from May’s record high in the face of an abating heat wave.

On the basis of end-use, production growth fell in all six segments compared to May, with consumer non-durables’ output shrinking 1.4% from last June, marking the second such contraction in three months.

The National Statistical Office also upgraded May’s Index of Industrial Production (IIP) to 6.2%, the highest in seven months, from its initial estimate of 5.9%.

Mining was the only segment to clock an acceleration in growth in June, with output rising 10.3% year-on-year, from 6.6% in May. However, actual production levels were 1.2% lower than May.

Within manufacturing, which accounts for nearly 78% of the IIP, nine out of 23 segments reported a contraction this June, including beverages, textiles, leather products and pharmaceuticals. Three sectors reported a double-digit rise in production — electrical equipment (28.4%), furniture (16%) and computers and electronics (10.7%).

June’s industrial performance fell below most economists’ forecasts, despite a beneficial base from last year when output had grown 4%. Consumer durables’ production clocked the highest uptick of 8.6%, over a 6.8% contraction last year, while primary goods grew 6.3%.

Capital goods’ output growth slowed to 2.4% from 2.9% in May, but June’s production levels were the highest so far in 2024-25. Intermediate goods’ production growth cooled to 3.1% from 3.9% in May and 5.2% a year ago, while infrastructure and construction goods’ rose just 4.4% compared to 6.3% in May and 13.3% a year ago.

Overall industrial output has risen 5.2% in the first quarter of this year, compared with 4.7% in 2023-24, with consumer non-durables being the only segment to report a contraction through this period, with production dropping 0.5% from a 6.8% uptick last year.

At end-June 2023, long-term debt (with original maturity of above one year) was placed at $505.5 billion. File
| Photo Credit: K. Pichumani

India’s external debt at end-June 2023 was placed at $629.1 billion, recording an increase of $4.7 billion over its level at end-March 2023 according to data released by the Reserve Bank of India (RBI) on September 28.

The external debt to GDP ratio declined to 18.6% at end-June 2023 from 18.8% at end-March 2023, the RBI said.

Valuation effect due to the appreciation of the U.S. dollar vis-à-vis the major currencies such as yen and SDR2 amounted to $3.1 billion. Excluding the valuation effect, external debt would have increased by $7.8 billion instead of $4.7 billion at end-June 2023 over end-March 2023.

At end-June 2023, long-term debt (with original maturity of above one year) was placed at $505.5 billion, recording an increase of $9.6 billion over its level at end-March 2023.

Balance of Payments

Meanwhile, India’s current account deficit (CAD) narrowed to $9.2 billion (1.1% of GDP) in Q1:2023-24 from $17.9 billion (2.1% of GDP) in Q1:2022-23 but it was higher than $1.3 billion (0.2% of GDP) in the preceding quarter, according to the RBI’s data.

The widening of CAD on a quarter-on-quarter basis was primarily on account of a higher trade deficit coupled with a lower surplus in net services and decline in private transfer receipts.
Net services receipts decreased sequentially, primarily due to a decline in exports of computer, travel and business services, though remained higher on a year-on- year (y-o-y) basis.

Net outgo on the income account, primarily reflecting payments of investment income, declined to $10.6 billion in Q1:2023-24 from $12.6 billion in Q4:2022-23, though higher than a year ago.
In the financial account, net foreign direct investment decreased to $5.1 billion from $13.4 billion a year ago.

International Investment Position

Net claims of non-residents on India increased by $12.1 billion during Q1:2023-24 and stood at $379.7 billion as at end-June 2023.

The rise in net claims of non-residents during the quarter was on account of higher rise in foreign-owned financial assets in India ($36.2 billion) when compared with Indian residents’ overseas financial assets ($24.1 billion) according to data released by the RBI.

Increase in reserve assets ($16.6 billion) was the largest contributor to the rise in Indian residents’ foreign assets during April-June 2023, followed by direct investment, loans and trade credit.

Inward portfolio investment ($15.0 billion) and foreign direct investment ($8.9 billion) together accounted for two thirds of the rise in foreign liabilities of Indian residents.

Photo used for representation purpose only.
| Photo Credit: K. Pichumani

India’s industrial output growth hit a three-month low of 3.7% in June, from a revised 5.3% in May, according to official data, with consumer durables’ production slipping back into contraction mode, and manufacturing growth slowing to 3.1% from 5.8% in May.

The data released by National Statistical Office stated that mining output grew 7.6% in June, while Electricity generation, which had recorded a 0.9% uptick in May after two months of contraction, picked up pace to rise 4.2% in June.

Direct tax collections

India’s net direct tax collections had risen 17.33% as of August 10, with a kitty of ₹5.84 lakh crore that constitutes 32.03% of the total Budget Estimates from Direct Taxes in 2023-24.

Gross direct tax collections were at ₹6.53 lakh crore, as of August 10, 15.73% higher than the revenues for the corresponding period of last year. Refunds issued to taxpayers so far this year stand at ₹69,000 crore, 3.73% higher than this time last year.

Overall industrial output levels were, however, 1.2% below May.

Consumer durables, which had recorded the first uptick in six months during May to rise 1.23%, shrank a sharp 6.9% in June. Overall production of durables remains 2.8% below last year’s levels in the first quarter of 2023-24.

Infrastructure and construction goods continued a strong double-digit growth streak for the third month in a row, rising 11.3% in June. However, their output was 1.6% lower than May.