Core concerns: on the Indian economy, the road ahead
The article examines the recent slowdown in India's core industrial sectors, noting that growth figures are often inflated by statistical low-base effects. It highlights ongoing struggles in the crude oil and steel sectors alongside rising import costs.
Why it matters
Understanding these industrial trends is critical for assessing the health of the Indian economy and its vulnerability to global energy price fluctuations.
The slowdown in the growth of India’s core industrial sectors in July was not surprising, with other indicators predicting easing demand conditions as well. Growth in the index of core industries (ICI) slowed to 5.4% in July from 6% in the previous month. This was in keeping with the Manufacturing Purchasing Managers’ Index, which in July eased to its lowest level since August 2021 due to weak domestic demand conditions. While July’s growth in the ICI was the second-highest growth rate in the last seven months, the data nevertheless highlight some concerning aspects of the Indian economy. The first has to do with the fact that a large part of even this slower growth seems to be based on a statistical low base effect.
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