Winning Bizness Economic Desk

India’s industrial growth increased to a six-month high of 5.2 per cent in November of last year as compared to the 3.7 per cent in the previous month, data released by the government showed.

Here, the highlight is that November is the third consecutive month of increase in industrial output propelled by a strong performance in the core sector.

The country’s core sector output had increased to a four-month high of 4.3 per cent in November of last year as compared to the 3.7 per cent in the previous month, with four of the eight sectors exhibiting better performance than the previous month.

Manufacturing, which accounts for over three-fourths of the index, increased to an eight-month high of 5.8 per cent in November 2024 as compared to the 4.4 per cent in the previous month. Mining, another important segment, moved northward 1.9 per cent from 0.9 per cent in October 2024.

The electricity sector growth also doubled to 4.4 per cent from two per cent in the previous month. It must be noted here that a low base has also contributed to the better performance,

Among use-based industries, five of six indicated a better showing in November as government spending picked up pace in the month. Output of capital goods also increased at a four-month high of nine per cent in November 2024.

The consumer durables segment was the fastest-growing segment, recording a 13.1 per cent growth over contraction for the previous year.

A point to note here is that non-durables growth slid to a three-month low of 0.6 per cent from 2.6 per cent in the previous month.

The country’s manufacturing growth at 5.3 per cent is likely to be nearly half of the 9.9 per cent growth registered the previous year as per the first advance estimates released in early-January.

Retail Inflation Slides to 5.22 pc in December

The country’s retail inflation rate, measured by the Consumer Price Index (CPI) for December of last year stood at 5.22 per cent, clocking a minor slide from the 5.48 per cent of the previous month (November).

November’s CPI declined from a 14-month high of 6.21 per cent in October, bringing the figure within the Reserve Bank of India (RBI)’s tolerance band of 2-6 per cent.

The slide in December 2024’s inflation was largely attributed to a notable drop in prices of key food items including vegetables, pulses, sugar and cereals.

A significant point to be highlighted here is that big declines were observed in categories such as vegetables, pulses and products, sugar and confectionery, personal care and cereals.

Inflation for rural areas was clocked at 5.76 per cent, while urban inflation stood lower at 4.58 per cent.

The Consumer Food Price Index (CFPI), which measures food inflation recorded a Year-on-Year (YoY) increase of 8.39 per cent for December 2024. The rural food inflation was slightly higher at 6.85 per cent while urban areas experienced a rate of 7.90 per cent.

Among food items, peas led the northward climb with a huge YoY inflation rate of 89.12 per cent followed by potatoes at 68.23 per cent, garlic at 58.17 per cent, coconut oil at 45.4 per cent and cauliflower at 39.42 per cent.

Some items showed deflation with jeera (cumin) experiencing the steepest slide at -34.69 per cent followed by ginger at -22.93 per cent, dry chillies at -10.32 per cent and LPG (excluding conveyance) at -9.29 per cent, the Ministry of Statistics and Programme Implementation (MoSPI) said.

Auto Retail Sales Down 12 pc in December Despite Healthy Performance in CY 2024

Last year (2024) witnessed the highest-ever automobile retail sales with a nine per cent growth as compared to the previous year (2023).

December 2024, however, witnessed total retail sales sliding southward by 12 per cent as compared to the corresponding period last year.

All categories except tractors registered a de-growth, with two-wheelers dipping by 18 per cent, passenger vehicles (PVs) by two per cent, commercial vehicles (CVs) by 5.2 per cent and three-wheelers by 4.5 per cent.

The above is according to data from the Federation of Automobile Dealers Associations (FADA).

The primary reasons for the decline are a low cash flow and poor marketing sentiment. Additionally, delayed crop payments, halted government disbursements and typical year-end factors are also reasons for the dip.

In the two-wheeler segment, supply challenges vis-à-vis popular models and the increasing push toward electric vehicles (EVs) has further negatively impacted volumes.

Tractors, however, registered a 25.7 per cent Year-on-Year (YoY) growth. In 2024, the highest-ever overall retail sales touched 26.1-million, up nine per cent from 23.9-million in 2023. Two-wheelers clocked an eleven per cent northward climb, followed by three-wheelers with 10.5 per cent, passenger vehicles with five per cent and tractors by three per cent.

Commercial vehicles registered a very tiny 0.7 per cent increase.

“Rural market was not doing badly during the month. Tractor sales are a sign of that. We believe that money may not have reached farmers yet…..Hence, we believe that buyers might have postponed their plans and January may see improved sales,” Mr C S Vigneshwar, President, FADA, said.

Retail sales in December 2024 were seen at 1.75-million versus 20.07-million in December 2023.

An important point to note here is that one major positive development in the passenger vehicle segment was inventory levels that slid to 55-60-days during the month.

Many dealers also mentioned that heightened discounts and limited financing options failed to offset weak demand.

Passenger vehicles fell by 1.9 per cent YoY and eight per cent Month-on-Month (MoM), primarily due to high inventory levels following the festive season and aggressive discounting aimed at clearing stock.

“Poor market sentiment, limited new model launches and intense price competition among co-dealers further impacted sales…..overall demand remained subdued, with many customers deferring purchases to January for anticipated benefits,” Mr Vigneshwar said.

The two-wheeler segment suffered a substantial drop of 17.6 per cent YoY and 54.2 per cent MoM.

CV retails slid by 5.2 per cent YoY and 12.1 per cent MoM due to low market sentiment, delayed government fund releases and slow financing approvals.

An important point to note here is that many customers postponed purchases, preferring 2025 models.

“Although year-end schemes and inquiries offered limited relief, overall sales remained under pressure,” the FADA president pointed out.

Dec Trade Deficit Narrows to USD 21.94-billion

The country’s trade deficit narrowed to USD 21.94-billion in December of last year from November’s USD 32.84-billion, driven by a sharp southward slide in gold and oil import bills, according to data from the Ministry of Commerce and Industry.

India’s merchandise exports declined by nearly one per cent to USD 38.01-billion in December 2024 while imports increased by 4.8 per cent to USD 59.95-billion.

The November trade data has been rejigged due to an unprecedented error in calculation of gold shipments.

The gold import bill for November 2024 has been lowered to USD 9.8-billion from the earlier number of USD 14.8-billion. The point to highlight here is that this is the sharpest ever correction in gold import data.

The Commerce Secretary Mr Sunil Barthwal, addressing the media, said that the government has formed a panel to ensure that such miscalculation in trade data is not repeated.

According to Mr Barthwal, the ministry has created SOPs to ensure better co-ordination between the Directorate-General of Commercial Intelligence and Statistics (DGCIS) and the Central Board of Indirect Taxes and Customs (CBIC) for trade data reporting.

The point to note here is that due to a sharp revision in the gold import bill, the overall import and trade deficit has also been significantly lowered.

Last month (December 2024), the ministry had reported the merchandise trade deficit at USD 37.84-billion.

In line with the cut in gold import bill, the November trade deficit data has been revised southward to USD 32.84-billion. The revision in gold import data will significantly impact the calculation of key macro-economic indicators like the Current Account Deficit (CAD) and economic output.

In December, the value of gold imports fell to USD 4.7-billion, which is less than half of November’s revised figure of USD 9.8-billion.

The oil import bill slid to USD 15.2-billion in December due to a decline in prices of petroleum products in the international markets.

The country’s overall exports (merchandise and services combined) increased marginally to USD 70.67-billion in December 2024 from USD 70.02-billion in the same month previous year, while the overall imports increased by 6.4 per cent YoY to USD 77.44-billion in December.