LINKING INDIA'S 2-SPEED ECONOMY

THE parallel analysis of some key indicators reveals a sharp and persistent divergence in India’s growth story. The Index of Industrial Production for September 2025, when combined with RBI’s Industrial Outlook Survey for July-September 2025, highlights a troubling conflict. Industrial growth is being vigorously driven by investment and capital goods, but is being held back by uneven household demand, particularly in mass-market segments.

- TULSI JAYAKUMAR

Simply put, while metal beams, electrical machinery, and motor parts are accelerating India’s industrial complex, the underlying sentiment paints a picture of a two-speed engine. Investment is thriving, but mass consumption is disturbingly lagging. This divergence presents a central challenge to policy makers: how to synchronise these two disparate growth trajectories and ensure the current investment boom translates into inclusive prosperity.

Headline figures confirm industry’s structural resilience. The IIP grew 4 percent this September. The manufacturing sector contributed much of this growth. Within this, high-weight industries—notably, basic metals and electrical equipment—acted as the primary accelerators. The 10.5 percent surge in infrastructure and construction goods reflects a strong policy dividend arising from continued government capital expenditure.

This public spending acts as a powerful counter-cyclical tool, generating demand for fundamental industrial inputs like steel and cement. Capex-led momentum is directly driving higher output for basic metals and electrical equipment, sectors that form the backbone of industrial capacity creation and productivity enhancement.