Slowdown in Core Infrastructure Sectors
A slowdown in state spending on public works following the general elections contributed to reduced industrial production.
Extreme temperatures in May and June affected economic activity, particularly in northern and western India
Core Sectors Performance (June):
Core sector growth slowed to a 20-month low of 4%.
Refinery Products: Output contracted by 1.5%, marking the first decline in five months.
Electricity: Declined by 3.6% from a high level in May, with annual growth slowing to 7.7%.
Steel: Output decreased by 4% from the previous month, with YoY growth dropping to 2.7% due to reduced demand from construction.
Coal: Output growth improved to 14.8% from May’s 10.2%.
Manufacturing Activity
The HSBC India Manufacturing Purchasing Managers’ Index (PMI) eased slightly to 58.1 in July from 58.3 in June.
Significant increases in input costs led manufacturers to raise selling prices the most in almost 11 years.
Inflation
Rising input costs for materials like coal, packaging, and steel could lead to higher overall inflation at both wholesale and retail levels.
The Reserve Bank of India’s Monetary Policy Committee faces challenges in managing inflation amid these price pressures.
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