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Tuesday, July 16, 2024, 11:46 am

Tuesday, July 16, 2024, 11:46 am

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India must increase pace in key industrial sectors.

India must increase pace in key industrial sectors.
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In May, output figures from the eight major infrastructure sectors indicate a slowdown in industrial activity due to the heatwave, which caused households, offices, and factories to use more power for cooling systems. The Ministry of Commerce and Industry announced provisional data on the Index of Eight Core Industries on June 28. Only coal for power plants and electricity generation saw double-digit output growth of 10.2% and 12.8%, respectively. Crude oil, fertilisers, and cement production decreased from the previous year, while natural gas, refinery products, and steel output expanded at a slower pace.

 

The warmth in May had a significant impact on economic activity in northern India, causing afternoon breaks at construction sites and daily peak power consumption at the Northern Regional Load Despatch Centre of 75 gigawatts or more. Construction activity was reduced by high temperatures, resulting in lower demand for cement and steel. Output of these important building materials also decreased sequentially. Fertilisers fell for the fifth consecutive month in May, indicating ongoing challenges in the rural hinterland’s agriculture industry. A positive increase in May’s farm input index compared to April’s corrected estimate provides some hope.

 

Official figures for the core sector and the Index of Industrial Production, which accounts for almost 40% of the total, have a month-long lag. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) for June indicates a comeback in factory activity from a three-month low in May due to the heatwave. HSBC India reported that June’s PMI score of 58.3 was 0.8 percentage points higher than May’s 57.5, placing it “comfortably above its long-run average”.

 

According to the survey, firms increased output and purchasing to match rising demand, while hiring increased at the quickest rate in over 19 years. Manufacturing companies raised their selling prices by the most in over two years, despite increased job creation and demand. This was due to increased expenses and material and transportation costs. The economy continues to encounter challenges, as seen by a three-month low in respondents’ confidence in future output. The next Union Budget is an opportunity for policymakers to strengthen momentum in key industrial sectors.

 

 

 

ABHISHEK VERMA

 


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