India’s factory output contracts for fifth consecutive month

14 September, 2020 12:00 AM printer

NEW DELHI: India’s factory output, as measured by the Index of Industrial Production (IIP) contracted by 10.4 per cent on an annual basis in July, according to data released by the ministry of statistics and programme implementation. This is the fifth consecutive month of contraction in IIP. While the contraction is in keeping with a Reuters forecast, it is better than the projected figure (11.5 per cent).

On the brighter side, the data does show a sequential recovery in industrial activity over the previous months. Experts believe a sequential recovery will continue in the months of August and September, but that the lack of fiscal stimulus and dissipation of pent-up demand could generate headwinds to this process, report agencies.

Industrial activity in the month of July this year was lower than its last year levels in all categories. IIP is classified into two kinds of categories. Economic activity-based categories include mining and quarrying, manufacturing, and electricity. Usage-based categories include primary goods, intermediate goods, capital goods, infrastructure goods and consumer goods.

The last category has a sub-classification of consumer durables and non-durables. A look at the usage-based categories suggests that both consumption and investment, the two crucial drivers of growth, continue to present a grim picture.


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