The early arrival of the southwest monsoon, vital to India’s farm and rural economy, weighed on industrial activity in May, as cooler temperatures reduced electricity demand and dragged down output. However, momentum in services and other sectors remained resilient, and early signs from June point to a modest recovery. Falling inflation and buoyant government revenues also provided comfort amid persistent global headwinds.Industrial Output Electricity generation, the largest component of the Index of Industrial Production, saw its sharpest fall since the peak of the COVID crisis in 2020-21, driven by reduced cooling demand after early monsoon rains. This setback is expected to contribute significantly to overall factory output in May. Core sector growth, which makes up 40.3% of the IIP, slowed to a nine-month low of 0.7% in May, largely due to the decline in power generation.
.png)
