Key Sectors Drag Economic Growth Indicators For June: ICRA

New Delhi, Jun 24 (KNN) India’s economic momentum displayed a mixed trend in June following a broad-based slowdown in May, according to a recent assessment by ICRA. 

The moderation in May was marked by weaker performance across a majority of high-frequency indicators, with June offering only partial signs of a rebound.

Economic growth in May stood at 6.5 percent year-on-year, decelerating from 7.8 percent in April. 

The decline was driven by subdued performance in 10 out of the 15 key indicators tracked by ICRA, with core sector output, electricity generation, and transportation metrics bearing the brunt of the slowdown.

Core sector output registered a meagre 0.7 percent growth in May—its slowest pace in nine months—dragged down by contraction in four of the eight core industries. 

Electricity generation, in particular, shrank by 5.8 percent, largely attributed to unseasonal and intense rainfall across various regions.

The slowdown extended to employment, with the all-India unemployment rate rising to 5.6 percent in May from 5.1 percent in April, as per the Periodic Labour Force Survey. 

The rise was more pronounced in rural areas, likely due to the seasonal completion of the rabi harvest. However, ICRA noted that year-on-year comparisons remain difficult owing to limited historical data continuity.

Several other key indicators pointed to a broader economic slowdown. 

Electricity generation saw a sharp year-on-year decline of 8.6 percent in May, worsening from a 1.9 percent drop in April. Coal India Limited’s output slipped back into negative territory, contracting by 1.4 percent after a marginal 0.5 percent increase the previous month.

Mobility and transportation metrics also signaled a loss of momentum. Growth in GST e-way bill generation fell to 18.9 percent from 23.4 percent, while domestic air passenger traffic slowed to 4.1 percent, down from 8.5 percent. 

Diesel consumption growth moderated to 2.2 percent from 4.3 percent, and passenger vehicle production growth dropped to 5.4 percent, nearly half of the previous rate.

Non-oil exports also saw a significant deceleration, rising just 5.1 percent compared to 10.3 percent in April. This overall slowdown extended to port activity as well, with cargo traffic growth softening to 4.3 percent from 7.0 percent.

Despite these setbacks, some indicators offered signs of resilience. Two-wheeler production rebounded in May, rising 4.9 percent after a 4.1 percent decline in April. 

Petrol consumption surged to 9.2 percent, benefiting from a low base. 
Vehicle registrations showed modest improvement at 5.4 percent versus 3.8 percent the previous month, and finished steel consumption rose to 7.8 percent from 6.0 percent.

(KNN Bureau)