India’s Economic Activity Growth Slows To 11.4% YoY In July From 12.1% In June: ICRA

New Delhi, Aug 26 (KNN) India's year-on-year (YoY) economic activity growth eased to 11.4 per cent in July 2026 from 12.1 per cent in June, after rising for three consecutive months, according to the ICRA Business Activity Monitor. 

The growth remained strong, although eight of the index's 16 high-frequency indicators recorded weaker year-on-year performance during the month.

Mining output, electricity generation, GST e-way bill generation and domestic airline passenger traffic contributed to the moderation. Higher rainfall in July is also likely to have affected electricity generation and mining activity.

Core Sector Growth Slows

Core sector output growth slowed to 5.4 per cent in July from an upwardly revised 6 per cent in June, with five of the nine constituent sectors recording weaker performance.

Iron ore output growth moderated sharply to 29.5 per cent, while electricity and steel production also slowed. Fertiliser and crude oil output registered steeper contractions. However, coal output growth rose to an 11-month high of 7.6 per cent, while cement output expanded by a seven-month high of 13.1 per cent, indicating continued strength in construction activity.

Based on these trends, ICRA expects industrial production growth, as measured by the Index of Industrial Production, to moderate to 6-6.5 per cent in July from 7.3 per cent in June.

Rural Unemployment Falls to Four-Month Low

The all-India unemployment rate declined to a four-month low of 5.1 per cent in July, supported mainly by improved rural labour market conditions. Rural unemployment fell to 4.5 per cent from 5 per cent in June, likely aided by a seasonal increase in agricultural activity, particularly kharif sowing.

Urban labour market conditions remained broadly stable, although the unemployment rate edged up to 6.7 per cent from 6.6 per cent as growth in labour force participation outpaced the rise in the worker-population ratio.

Outlook Remains Cautious

ICRA said the slowdown in economic activity was not broad-based, with several indicators, including passenger vehicle output, vehicle registrations, bank deposits, non-food credit and fuel consumption, recording improved growth.

However, the agency remains cautious about the potential impact of below-normal monsoon rainfall on crop output and farm incomes, which could affect rural demand in the second half of FY2027. A likely rise in retail inflation in the coming months could also constrain discretionary consumer spending.

(KNN Bureau)