First-half industrial growth reached 6.8 per cent, comfortably beating the 4.4 per cent pace recorded during the same period last year. High-frequency consumer indicators revealed notable resilience, evidenced by a 33.4 per cent year-on-year surge in September two-wheeler sales and a recovery in consumer non-durables. Petroleum consumption also managed to rebound by 3.4 per cent following five straight months of decline. Meanwhile, headwinds persist from unfavorable base effects stemming from prior GST rate adjustments and lingering El Niño concerns.
Key points
Government capital spending alongside a rebound in private investments is providing vital…: Government capital spending alongside a rebound in private investments is providing vital momentum for industrial output.
Unfavorable base effects caused by previous GST rate cuts pose near-term statistical head…: Unfavorable base effects caused by previous GST rate cuts pose near-term statistical headwinds for capital goods and manufacturing.
External risks including weak monsoon conditions and the delayed impact of global supply…: External risks including weak monsoon conditions and the delayed impact of global supply shocks threaten to impede second-half growth.
Sources checked by our analysis pipeline: 1
New Delhi: Festive demand and sustained public capital expenditure are expected to support India's industrial activity in the second half of FY27, although unfavourable base effects, weak monsoon conditions and higher input costs could weigh on production, according to a report by Union Bank of India.
The report said the outlook would depend on whether improving rural demand and continued investment translate into sustained industrial growth, particularly as manufacturing and consumer durables face a less favourable comparison with the previous year.
"Despite overall moderation, we see some improvement in rural demand as a surprise element despite EI-Nino led volatility. We expect upcoming festive demand and public capex push to support industrial activities in H2 FY27," the report said.
Industrial production growth moderated to 6.7 per cent in September from 7.8 per cent in August. However, growth during the first half of FY27 stood at 6.8 per cent, higher than 4.4 per cent in the corresponding period last year.
The report highlighted that the recovery in private capital expenditure was also supporting investment momentum. Infrastructure and construction output grew 7.2 per…
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