An ET analysis found that 12 of the 22 manufacturing firms captured in the index of industrial production were still operating at lower levels than during the pre-pandemic period. “It is becoming progressively clear that notwithstanding some high volatile growth numbers, it is not broad-based. Deficiency in spending is manifest here,” said Madan Sabnavis, chief economist, Bank of Baroda.
While the overall industrial activity was up 9.6% in Q1 FY24 compared with Q1FY20, computer electronic and optical products was down 33.1%, whereas wearing apparel was down 34.5% during this period. “The weakness in electronic good productions is despite the fact that India’s electronic goods exports has shown strong growth of 47% YoY in Q1FY24 and 51% in FY23. On the import front, electronic goods has seen a more moderate growth at 4.9% YoY in FY23 and 6.3% growth in Q1FY24. As a result, net electronic goods imports has reduced in Q1FY24,” said Gaura Sengupta, India Economist, IDFC First Bank.
Economists note that government capex also has much to do with diverse performance. “While infrastructure and construction-linked sectors have been outperforming, the consumer-linked segments still need to catch up,” said Upasna Bhardwaj, chief economist, Kotak Mahindra Bank.
“Performance matches the pattern of fiscal spending wherein there has been a substantial emphasis on capex spend and much less on directly stimulating consumption demand,” said Abhishek Upadhyay, senior VP, ICICI Securities PD Ltd.