The Hindu Editorial Analysis
31 December 2025
Too good to last
(Source – The Hindu, International Edition – Page No. – 8)
Topic : GS 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment
Context
The economic headwinds confronting the economy are unlikely to ease anytime soon.
Introduction
India’s industrial surge in November 2025 appears impressive at first glance, driven by manufacturing-led growth and a sharp rise in the Index of Industrial Production. However, a closer examination suggests this performance reflects seasonal factors, festive demand, and one-off policy boosts, rather than a durable revival in industrial momentum or consumer demand.
Overview: November Industrial Performance
- India’s industrial growth in November 2025 appeared strong but short-lived
- The performance was driven mainly by manufacturing, rather than broad-based momentum
- The surge is best seen as a temporary spike, not the start of a sustained recovery
Key Data Highlights
- Index of Industrial Production (IIP) grew 6.7%, the fastest in 25 months
- Manufacturing output rose 8%, also a 25-month high
- This followed October 2025, when growth had slipped to a 14-month low
Why the Growth Looks Impressive
- At first glance, the numbers appear encouraging and robust
- Strong rebounds were seen in:
- Consumer durables: 10.3% growth (12-month high)
- Consumer non-durables: 7.3% growth (25-month high)
Underlying Drivers Behind the Surge
- Post-festive restocking by sellers after inventory depletion
- GST rate cuts deliberately timed around the festive season, boosting short-term demand
- Mining sector recovery after two months of contraction due to an extended monsoon
- Mining growth stood at 5.4% in November 2025
Why These Factors Are Not Sustainable
- Festive demand is seasonal and will not return until October–November 2026
- GST-related demand boost is already fading, according to industry feedback
- Electricity and mining output remain weather-dependent
- Overall consumer demand continues to be weak
Longer-Term Trend: A Reality Check
- IIP growth averaged only 3.3% during April–November 2025
- This is the lowest for this period in any post-COVID year
- Consumer non-durables contracted by 1%, signalling persistent demand stress
Growth Outlook from RBI
- Q3 growth projected at 7%, down from 8% average in Q1 and Q2
- Q4 growth expected to slow further to 6.5%
Persistent Economic Headwinds
- High U.S. tariffs (50%) continue to affect trade
- Private investment remains sluggish
- Foreign capital outflows are ongoing
- Weakening rupee raises import costs in an import-dependent economy
- Real wage growth is insufficient
- Consumer demand remains tepid
Conclusion
The November upswing in industrial output is best seen as a temporary deviation, not a structural turnaround. With sluggish demand, weak private investment, external trade pressures, and a soft growth outlook ahead, the economy continues to face persistent headwinds. Sustainable growth will depend on broad-based demand recovery, not short-term statistical spikes.