Manufacturing drags IIP growth down to 3.7% in June

India’s industrial output growth slumped to three-month low of 3.7% in June from 5.3% in the previous month dragged by sluggish expansion in manufacturing production, the government data showed.

Factory output measured in terms of the Index of Industrial Production (IIP) had posted a growth of 12.6% in June 2022. May IIP growth figure has been revised upward to 5.3% from 5.2% reported earlier.

Manufacturing sector growth slumped to 3.1% in June from 5.8% recorded in the previous month, as per data released by the Ministry of Statistics & Programme Implementation.

“The YoY growth in the IIP slid to a weaker-than-expected three-month low of 3.7% in June 2023 belying the hope engendered by the core sector print,” said Aditi Nayar, Chief Economist at ICRA.

The sequential slowdown was led by the manufacturing sector, while the mining and electricity sectors witnessed an improvement in their growth performance amid deficient rainfall in the month.

Mining output growth accelerated to 7.6% in June from 6.4% in May. Growth in electricity production, which was a sluggish 0.9% in May, jumped to 4.2% in June. Analysts said deficient rainfall led to healthy expansion in mining and electricity during the month of June. Mining activities get negatively impacted during the rainy season.

Cumulative IIP growth in April-June period of the current financial year stands at 4.5%. In the same period last year it stood at 12.9% largely due to low base.

Manufacturing, which has 77.63% weight in the IIP, posted a growth of 4.7% in the first quarter of this fiscal year-on-year. In April-June 2022 period manufacturing had posted a growth of 12.8%.

“Going forward, two factors can swing the industrial performance — slowdown in the advanced economies, and inadequate monsoon in India,” said Dharmakirti Joshi, Chief Economist, CRISIL.

On the use-based side, output of consumer durables contracted by 6.9%  year-on-year in June dragged by a sharp decline in exports. Growth in the output of capital goods and consumer non-durables fell sharply in June on a month-on-month basis.

Cut-off box - Direct tax collections rise by 16% to Rs 6.53 lakh crore
Gross direct tax collection rose to Rs 6.53 lakh crore till August 10 in the current fiscal which is 15.73% higher when compared with the corresponding period of last year the government data showed.
During 1st April 2023 to 10th August 2023 period the Income Tax Department issued refunds amounting to around Rs 69000 crore which is 3.73% higher than refunds issued during the same period last year.
Direct Tax collection net of refunds stands at Rs 5.84 lakh crore during the period 1st April to 10th August 2023 which is 17.33% higher than the net collections for the corresponding period of last year the Central Board of Direct Taxes (CBDT) said in a statement.
The direct tax collection till August 10 of the current financial year is 32.03% of the total Budget Estimates of Direct Taxes for 2023-24.