Uneven growth: On industrial production data for September Politics & News

The industrial production data for September is especially useful as it provides insights into longer periods such as the second quarter and the first half of the financial year. The news is not all bad, but there are areas that warrant attention. When looked at on a half-yearly basis, the IIP data for April-September 2025 show that industrial growth was the slowest in at least five years. At just 3%, the half-yearly growth is well below what it should be. However, quarterly growth shows that things are improving — Q2 growth was a more robust 4.1%, compared to 2% in Q1. The bright spot in all of this, at least on the surface, has been the manufacturing sector. In September, it grew by 4.8%, the second highest in this financial year. On a quarterly basis, the July-September 2025 quarter saw the manufacturing sector grow by a relatively strong 4.9%, the fastest quarterly growth it has seen since the quarter-ended December 2023. On a half-yearly basis, too, the sector’s growth bounced back to 4.1% in the April-September 2025 half, after having slowed to 3.8% in the first half of the previous year. Activity in the mining sector contracted in September 2025, the second quarter, as well as in the first half of the financial year. While some of this can be attributed to the monsoon this year, this performance is still unusually poor. Strengthening the sector should be a priority to shore up India’s energy and strategic mineral security.

The manufacturing sector’s apparent strong performance, too, is not something that should be taken at face value. The data show that the growth is not broad-based, and is instead concentrated in some sectors. Of the 23 main manufacturing sub-sectors measured in the IIP, more than half contracted in the July-September 2025 quarter. Of concern is that labour-intensive sectors such as apparels, leather products, rubber products and plastics, all contracted in the September 2025 quarter. The sectors that grew included wood products, mineral products, basic metals and fabricated metal products, many of which are more capital intensive. If this trend persists, it could have negative implications for job creation, and warrants attention. The other troubling aspect of the data is that the consumer non-durables sector has contracted for the last six consecutive quarters. While some of these are essential items such as salt and edible oils, others are items of discretionary spending. Much of this is because of the base effect, but slack demand has been a problem that policymakers have been grappling with for some time. The only real solution lies in increasing incomes and creating jobs.