NEW DELHI: Growth in industrial production to moderate in FY24, from 5.2 per cent recorded in FY23, as per Acuite Ratings and Research.

Growth in India’s IIP eased to 5.8 per cent YoY in Sep23 from 10.3 per cent YoY in Aug23. The outcome was lower than market consensus of 7.0 per cent, and also marked the first negative surprise in the last four months.

On a sequential basis, IIP contracted by 2.4 per cent MoM led by broad-based weakness across key sub-sectors. On a seasonal basis, this performance was worse than typically seen in the month of September where past sequential growth has averaged 0.4 per cent.

On the use-based side too, moderation was broad-based, with Consumer goods leading the downside where growth sharply slipped from 8.0 per cent YoY in Aug23 to 1.9 per cent in Sep23, the report said.

On annualised basis, growth in mining held up to mark its third consecutive double-digit print, while moderation was led by index heavyweight manufacturing as well as electricity sub-sectors.

Economic activity continues to derive support from healthy pace of government capex and steady urban demand.

The onset of festive season as well as support from fiscal spending ahead of key elections, are likely to partly offset the El Nino driven downside in rural consumption, the report said.

Suman Chowdhury, Chief Economist and Head -Research, Acuite Ratings & Research, said: “Industrial activity has seen a healthy uptick in the first half of the current fiscal with IIP growth at 6.0 per cent YoY which is one of the highest prints for H1 if one excludes the last two years after Covid.

"Without the base support and risks of weaker rural demand, we expect IIP growth to moderate in the second half of the fiscal. On an overall basis, IIP growth is likely to be lower than 5.3 per cent recorded in the previous year.”