Daijiworld Media Network - New Delhi

New Delhi, Apr 28: Industry experts suggest that India's domestic policies are poised to bolster economic growth in the current fiscal year, driven by the implementation of income tax cuts and the anticipated continuation of rate reductions by the Reserve Bank of India (RBI). Their optimism follows a marginal increase in the Index of Industrial Production (IIP), which rose to 3 per cent in March from 2.9 per cent in the preceding month.

According to data released by the Ministry of Statistics, the power sector demonstrated a strong output growth of 6.3 per cent during March. In contrast, the mining sector lagged behind with a modest growth of 0.4 per cent in the same period.

“Another year of normal monsoon, and lower crude prices will also cushion the impact of external headwinds,” commented Dharmakirti Joshi, Chief Economist at Crisil Limited.

The recovery in the IIP was primarily led by infrastructure and construction goods, which saw an 8.8 per cent growth in March, a notable increase from the 6.8 per cent growth in the previous month. This uptick indicates a potential acceleration in government capital expenditure towards the close of fiscal year 2025.

Durable goods also experienced a recovery, with growth reaching 6.6 per cent compared to 3.7 per cent previously, signaling an improvement in consumer purchasing power as food inflation eases.

Export-oriented sectors such as textiles, machinery, and petroleum products showed improved growth, potentially attributed to the frontloading of shipments in anticipation of reciprocal tariffs. The burgeoning new-age exports segment, encompassing computers and electronic products, witnessed a significant growth surge to 21.5 per cent from 11.2 per cent, likely also due to frontloading, according to Joshi.

Mahendra Patil, Founder and Managing Partner at MP Financial Advisory Services, noted that the FY25 IIP growth of 4 per cent reflects a stable industrial performance amidst broader economic normalization.

“While industrial growth has moderated, the broader economy remains robust, albeit slightly softer than the previous year. Stable core sectors, resilient tax revenues, and benign inflation provide a supportive backdrop for sustained growth into FY2026. With inflation under control, the RBI has further headroom to maintain an accommodative stance, provided external volatilities do not escalate significantly,” he concluded.