However, a favourable monsoon scenario, easing inflation, and the ongoing monetary policy transmission of rate cuts are likely to act as key tailwinds for the economy
While emphasising that global headwinds continue to dampen investment sentiment, a report has revealed that domestic demand recovery remains uneven. The report mentioned that urban consumption is still lagging.
However, a favourable monsoon scenario, easing inflation, the ongoing monetary policy transmission of rate cuts and support to consumption from Goods and Services Tax (GST) and income tax cuts are expected to act as key tailwinds for the economy, CareEdge Ratings said in a report.
“Adding to the pressures, the US has imposed an additional 25 per cent tariff on India, taking the overall tariff burden to 50 per cent and keeping trade-related uncertainties elevated. Monitoring the trajectory of both consumption and investment will be crucial in the months ahead for the performance of industrial production,” the report emphasised.
Growth in India’s industrial production increased to 3.5 per cent in July, compared to 1.5 per cent in June. The manufacturing and electricity sectors provided support to overall industrial production, while the mining sector continued to contract, albeit at a slower pace.
CareEdge Ratings said that the output of consumer durables and consumer nondurables has shown signs of recovery. Overall, a sustained improvement in the consumption and investment scenario remains critical for the industrial performance. Manufacturing sector output expanded by 5.4 per cent in July, up from 3.7 per cent in June. On a year-on-year basis, output increased in 14 out of the 23 manufacturing subcategories. Based on use-based classification, infrastructure and construction goods registered a healthy growth, with output rising by 11.9 per cent in July, the report emphasised.
