For those who'd like to see the silver lining rather than the cloud, the industrial output figures released on Thursday are just what the doctor ordered. The Index of Industrial Production (IIP) for May 2012 shows a positive growth of 2.4 percent after declines in March and April.
So let's see all of the silver lining first - or whatever part of it is visible now.
It is the Indian consumer who's holding economic growth up. Growth is strongest here - at 4.3 percent in May, and 4 percent for April and May combined. Growth in consumer goods outpaced capital goods (-13.8 percent in April-May), basic goods (3.1 percent) and intermediate goods (0.6 percent).
The Indian consumer is the real India bull, not Indian business. Evidence: within consumer goods, durables are growing much faster (7.2 percent in April-May) than non-durables (1.3 percent). If people are buying fridges, TVs, washing machines and computers (which is what durables are largely about) despite the enveloping economic gloom, they clearly have a different view of the future from businessmen, who are simply not investing - as evident in the capital goods numbers.
The consumer story is probably more rural than urban. All the money that has been poured into the rural sector - from higher procurement prices for foodgrain to welfare schemes like NREGA - is adding up to higher demand for consumer durables and non-durables. This is evident from the growth of automobile products (especially two-wheelers), textiles (5.2 percent in April-May), luggage and footwear (5.9 percent), publications and recorded media (12.5 percent, most of it semi-urban and rural), etc.
And now for the cloud.
The May figures are weak. The 2.4 percent IIP growth in May is just a third of last year's 6.2 percent. For April and May, the figure is worse at 0.8 percent (versus 5.7 percent in 2011).
The revised April figures are shocking. From a minuscule 0.1 percent, the IIP growth figures have been revised to a negative -0.9 percent. April 2012 thus saw a contraction. If the May figures are similarly revised downwards, clearly the overall recovery is far from robust.
Mining and manufacturing are still under the weather. While mining dropped 2 percent, manufacturing (with a weight of 75 percent in the index) was flat at just 0.6 percent during April-May. Only electricity went up by 5.2 percent - but one should wonder where all the power is going when mining and industry are going downhill.
The consumer story could peter out if the monsoon this year is weak - as seem likely. In this situation, unless the government acts to revive investment, the economy will sink into a further morass.
Net-net, the cloud looks larger than the silver lining. If Manmohan Singh wants to revive the animal spirits of the economy, he has to first restore business confidence, especially in the mining industry.
Currently, only the Indian consumer seems to exhibit any kind of animal spirit - but this spirit is flagging. From 5.2 percent in April-May 2011, the consumer goods growth story is down to 4 percent. (Read the full IIP numbers here).
The Indian economy is firing on only one cylinder - the consumer. Time to get the other cylinders firing again.