Measuring manufacturing growth afresh: Three questions
Three questions regarding Indian manufacturing performance have emerged as the country grapples with the implications of its manufacturing export expansion and government initiatives like Make in India and PLI schemes. First, the manufacturing Gross Value Added (GVA) price deflator has experienced negative growth for nine consecutive quarters, a puzzling trend that does not align with overall price deflation in the economy.
Second, there is a significant divergence between real GVA and the Index of Industrial Production (IIP) for manufacturing, with the former outpacing the latter by 15 percentage points in 2025-26. Third, the correlation between real GVA and IIP growth rates has weakened dramatically since 2011-12, contrasting with a strong 0.8 correlation before the 2011-12 methodology changes.
These questions are crucial in understanding the performance of India's manufacturing sector and its ability to withstand competition from China and the government's efforts to revitalize the industry.
Written by urgent.news from The Indian Express's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
