Introduction

“Too good to last” reflects a cautionary assessment of India’s recent growth performance. While headline indicators suggested resilience in early 2024–25, the article argues that this momentum was driven largely by temporary and uneven factors. Emerging data now point towards weakening industrial output, slowing consumption, and structural constraints that threaten the sustainability of India’s growth trajectory.

Key Facts from the Article

• Index of Industrial Production (IIP) growth slowed to 2.7% in November 2024.
• Manufacturing growth decelerated sharply from 9.3% in October to 2.7%.
• Mining sector saw a contraction due to weaker demand and lower output.
• Consumer durables and non-durables showed stagnation, reflecting demand stress.
• GST collections and festive-season boost masked underlying weakness.

Index of Industrial Production (IIP) is a statistical measure that shows the growth or decline in industrial activity in an economy over a period of time.

• It measures output of Manufacturing, Mining, and Electricity sectors
• Released monthly by the National Statistical Office (NSO)
• Base year: 2022-23 (REVISED)
• Used to track industrial growth and economic health

Key Issues Highlighted

Temporary Growth Drivers

1. Recent growth was boosted by festive demand and base effects.
2. Example: October surge did not sustain into November.

Manufacturing Sector Stress

1. Manufacturing remains vulnerable to global demand slowdown.
2. Example: Sharp fall in factory output growth.

Weak Consumption Demand

1. Rural and middle-class demand remains subdued.
2. Example: Slow growth in consumer durables and FMCG.

Mining and Core Sector Slowdown

1. Reduced infrastructure activity impacts mining output.
2. Example: Mining contraction dragging overall IIP.

Limited Investment Revival

1. Private investment remains cautious amid global uncertainty.
2. Example: Capex concentrated in few large firms, not broad-based.

Global Practices / Comparative Perspectives

Indian Policy & Economic Thinking

1. Counter-cyclical fiscal policy to smooth growth volatility.
2. PLI schemes to strengthen manufacturing competitiveness.
3. Infrastructure-led growth via public capital expenditure.
4. MSME credit support to revive employment-intensive sectors.
5. Consumption revival focus through income and rural support.

Way Forward

1. Broaden demand base by strengthening rural incomes and wages.
2. Revive manufacturing depth beyond headline output numbers.
3. Support MSMEs through easier credit and reduced compliance burden.
4. Encourage private investment via policy certainty and lower risk perception.
5. Boost exports diversification to reduce global demand dependence.
6. Strengthen data-driven policymaking to identify early slowdown signals.

Conclusion

India’s recent growth surge, while encouraging, cannot be mistaken for structural strength. The article rightly warns that without deeper reforms in manufacturing, consumption, and investment, economic momentum may fade. Sustainable growth will depend on inclusive demand revival and long-term productivity gains.

Prelims MCQ

Q1. With reference to India’s recent industrial growth trends, consider the following statements:

1. A rise in IIP growth always reflects broad-based economic expansion.

2. Manufacturing sector performance significantly influences overall IIP trends.

3. Consumption demand plays a critical role in sustaining industrial growth.

4. Mining sector performance has no impact on industrial production data.

Which of the statements given above is/are correct?

a) 2 and 3 only

b) 1 and 3 only

c) 1 and 2 only

d) 1, 2 and 3

Answer: D) 1, 2 and 3 only

UPSC Mains Practice Question

Q1. “Short-term growth spurts do not guarantee long-term economic resilience.”

In light of recent industrial production trends, critically analyse the sustainability of India’s growth trajectory. (250 words)