Gross domestic product (GDP) data released last month confirm fears of an imminent economic slowdown in India. While the decline in growth to 5.4% in the second quarter of 2024-25—part of a six-quarter downtrend—may have rung the alarm bells, signs of trouble have been visible for a while. Among these was weak manufacturing, which grew only 2.2%. While the debate on whether this is cyclical or structural is likely to continue, there is certainly a cause for worry as far as the manufacturing sector is concerned.
Detailed estimates from the National Accounts (NA) are available up to 2022-23. These suggest that the sector has grown at a paltry 2.5% annually during the years from 2017-18 to 2022-23. Since 2018-19, the last full year before the pandemic, growth has been just 1.8% per year. The net result is that the share of manufacturing in national income in 2022-23 is lower than it was in 2017-18. However, national accounts present only a part of the problem.
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