For the fourth month running, LSM reading recorded a positive year-on-year growth, as March 2024 LSM grew 2 percent year-on-year. Another way of saying that is March 2024 LSM reading grew “only” 2 percent year-on-year. Only, because it comes from a multiyear (peak Covid March 2020 excluded) low March reading from last year. Recall that March 2023 saw the index dip 26.3 percent year-on-year, which was an all-time low for any monthly growth since the new base started (minus peak Covid). In that context, it is only showing signs of painfully slow recovery, if it can be termed as such.

Another way to look at the numbers is the cumulative fiscal year growth which is still in red – albeit 0.11 percent – marking 21 straight months of negative growth – easily the longest such stretch in decades. On a positive note, LSM for 3QFY24 was the first instance of positive quarterly growth, after LSM the worst period for LSM recession that went on for six quarters.

Oddly enough, the PBS fails to take the same into account when tabulating the quarterly GDP growth. Mind you, the GDP numbers for 2QFY24 came with a considerable lag, with LSM numbers already out. Even accounting for subsequent revisions, at no point did 2QFY24 LSM go into positive territory. The GDP tabulation for 2QFY24 is based on 0.48 LSM growth – whereas the actual number sits at negative 0.95 percent. The 3QFY24 GDP will surely be revised accordingly, and the 2Q revised GDP will be much lower than the provisional 1.0 percent.

And now on to the usual anomalies in the data that go on. The most prominent case is that of wearing apparel, that takes into account exported quantities of readymade garments, tracked and published by none other than the PBS itself. The PBS puts the wearing apparel growth at 5.4 percent, whereas the monthly advance release of exports shows the category export growth at a negative 3.1 percent. As a result, apparel has the second highest positive impact on LSM at 0.77 percent – when it should actually be in the red by as much or more.

The third highest positive contribution to LSM comes from the furniture category with a minuscule share of 0.51 percent. In dollar terms, furniture exports during 9MFY24 totaled a ‘colossal’ $6.5 million – down 37 percent year-on-year – averaging less than a million dollar a month. Textile, with a heavy 18 percent weight in the LSM basket continues to drag the LSM down – as both cotton yarn and cotton cloth production stayed at multiyear lows, for various reasons.

Among sectors with a meaningful weight, only pharmaceutical shows double-digit growth. For all other sectors with a weight in excess of 5 percent, growth is confined to low single digits. In terms of splits, it is 50-50 among the 22 sectors on the positive and negative growth sides.

Going forward, the low base of 4QFY23 should lead to a considerable improvement in 4QFY24 LSM numbers. That said, headwinds are plenty, from delayed interest rate cycle reversal, expected increase in administered energy prices, and no room for industrial subsidies or concessions. LSM should revive, but it won’t be a spectacle.