Industrial Growth in India: A Shift to Government Infrastructure Spends

• The Index of Industrial Production (IIP) in India showed a 10-month low growth rate in June, at 1.5%.

• This was largely due to a contraction in mining activity and electricity output.

• The early onset of the southwest monsoon led to water logging in mining belts in Odisha, Jharkhand, and West Bengal, hampering economic activity.

• The damage to power distribution infrastructure and supply chain disruptions may have contributed to the sluggish growth in industrial output at 3.9% in June, up from 3.5% a year ago.

• The robust growth in capital (3.5%), intermediate (5.5%), and infrastructure (7.2%) goods output indicates that much of industrial growth continues to hinge on the government’s infrastructure spends.

• There has been a general reluctance to explicitly correlate disruptions in economic activity with climate-related events, especially in official narratives such as the IIP or GDP data releases.

• Climate-related disruptions, such as in mining belts, are rarely mentioned in IIP or national accounts commentary.

• The time has come for India to make a systemic shift to integrate climate attribution to economic activity.

Maharashtra Onion Prices Fall 15%

• Maharashtra’s largest onion market in Lasalgaon, Maharashtra, has seen wholesale onion prices drop by 15% in the past two weeks.

• Farmers’ associations have called for immediate intervention from the State and Central governments.

• The primary demand is for an assured Minimum Support Price (MSP) of ₹3,000 per quintal, significantly above the current market rate of ₹1,275 per quintal.

• The farmers argue that these prices are not just economic exploitation but disrespect to their year-round labour.

• Other demands include a 20-year long-term export policy, immediate procurement by the State government, an Onion Fund Corporation, compensation for farmers selling onions below production cost, setting up onion processing units with Central support, subsidized transport and fuel rates, a 10% export subsidy, and buffer stock procurement at no less than ₹3,000 per quintal.