India's industrial output growth slowed to 3.2 pc in December, down from 5.2 pc in the previous month, as the manufacturing sector witnessed a deceleration, official data released on Wednesday showed.
The slowdown in industrial production follows a period of relatively stronger growth, bringing the average Index of Industrial Production (IIP) growth to 3.9 pc in the third quarter of the 2024-25 financial year.
Economists attribute the moderation in manufacturing output to a base effect, which led to a lower year-on-year increase.
Sakshi Gupta, principal economist at HDFC Bank, said that while industrial production growth had slowed, a mild improvement was likely in January, supported by rising consumption demand and the positive impact of increased government infrastructure spending.
For the April to December period of the financial year, industrial activity recorded a growth of 4 pc, significantly lower than the 6.3 pc seen in the same period of the previous year.
The dip in IIP figures aligns with a slowdown in core sector output, which grew by 4 pc in December, compared to 4.4 pc in November, according to data released last month.
The core sector, which comprises eight industries, carries a weightage of 40.27 pc in the overall IIP calculation.
The manufacturing sector, which accounts for a significant share of industrial output, expanded by just 3% in December, a drop from 5.5 pc in the previous month.
Of the 23 manufacturing sectors, 16 reported positive growth, with notable contributions from the manufacture of basic metals, which grew by 6.7 pc, electrical equipment at 40.1 pc, and coke and refined petroleum products at 3.9 pc.
However, some export-linked industries, such as leather and pharmaceuticals, saw weaker or negative growth.
Madan Sabnavis, chief economist at Bank of Baroda, noted that domestic demand patterns also played a role, with the vehicle segment experiencing a contraction.
The electricity sector, however, recorded a stronger performance, with growth rising to 6.2 pc in December from 4.4 pc in the previous month. The mining sector also saw an improvement, expanding by 2.6 pc, up from 1.9 pc in November.