The FINANCIAL — India’s industrial-output growth is expected to have slowed to its weakest level in six months in April amid weak energy production and a steady decline in exports, a survey of economists shows.
Industrial production, which includes the output of factories, mines and utilities, likely rose 1.8% from a year earlier, according to the median estimate of 11 economists polled by The Wall Street Journal.
If the data matches the estimate, it would be the weakest reading since October and the second-successive month of easing in industrial growth. Output expanded 2.1% in March and a revised 4.9% in February.
The government will release the data on June 12.
Economists said early indicators such as infrastructure output point to weak industrial performance.
The output of India’s eight key infrastructure industries, which together contribute about 38% to industrial production, declined 0.4% from a year earlier in April, official data released last week showed. Six of these industries contracted, with natural gas, crude oil and cement leading the declines.
Overseas demand for Indian products also was weak, suggesting manufacturers scaled back production to prevent a buildup of stocks.
Data released last month showed India’s exports fell 14% from a year earlier in April, the fifth successive month of decline.
While the government has been trying to promote the country as an attractive manufacturing destination with its ‘Make in India’ campaign, economists say significant improvements in the business environment are needed before global companies will ramp-up investments.
The country’s infrastructure is often cited as a major hurdle in need of a significant revamp. Bureaucratic red- tape must be reduced and a fair and predictable tax regime is also necessary, economists add.
“We are unlikely to see signs of the ‘Made in India’ push by the government, as manufacturing will remain under pressure, particularly for export–oriented industries which are suffering from low competitiveness,” Moody’s Analytics said in a research note.
Indicators of demand in the economy, such as capacity utilization and auto sales, suggest that the cyclical upswing in the economy is fading, it added.
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