Context:
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India’s industrial output growth, measured by the Index of Industrial Production (IIP), slowed to 4% in August, down from 4.3% in July.
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Despite moderation, the performance was significantly better than August of the previous year, when growth was stagnant at 0%.
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The slowdown reflects weak consumption demand, especially in consumer durables and non-durables, along with transitional effects of GST-related adjustments.
Key Highlights:
Index of Industrial Production (IIP) Trends
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Overall IIP growth: 4% (August) vs 4.3% (July).
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Growth remained above last year’s low base, indicating gradual recovery.
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Industrial momentum showed sectoral divergence rather than broad-based expansion.
Sector-wise Performance
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Manufacturing Sector:
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Growth slowed to 3.8% in August from 6% in July.
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However, it remained higher than 1.2% recorded in August last year.
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Mining Sector:
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Expanded by 6%, marking a 14-month high, supporting core industrial activity.
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Electricity Sector:
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Grew at 4.1%, a five-month high, indicating improved power demand.
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Consumption-related Concerns
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Consumer Non-Durables:
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Contracted sharply by 6.3%, the worst performance in eight months.
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Signals stress in mass consumption and rural demand.
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Consumer Durables:
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Continued weak performance, reflecting cautious household spending.
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Primary Goods and Policy Effects
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Primary Goods Sector:
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Recorded a seven-month high growth of 5.2%, showing recovery in basic industries.
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GST and Tariff Measures:
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Benefits from tariff changes and GST implementation may not yet be fully reflected in August IIP data.
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Transitional issues could be dampening business sentiment in the short term.
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UPSC Relevance (GS-wise):
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GS Paper 3 – Indian Economy
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Prelims:
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Understanding IIP, sectoral classification, and consumer durables vs non-durables.
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Trends in manufacturing, mining, and electricity sectors.
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Mains:
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Analysis of industrial slowdown, consumption demand challenges, and structural reforms like GST.
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Role of primary goods and infrastructure sectors in sustaining growth.
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Linkages between industrial performance, employment, and overall economic recovery.
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