COVID INDUSTRY … India’s industrial output contracted by 16 per cent in first week of lockdown

NEWS INDUSTRIAL
NEW DELHI: The nation’s industrial output has contracted majorly in March when the Covid-19 virus spread started and began disrupting economic activity. The nationwide lockdown was announced on March 24, and only after this did the industries remain shut; meaning a week of disruption in March. The Index of Industrial Production fell by 16.7 per cent in March compared to the figure the same month last year, the government’s statistics office reckoned in a press release here.

As per provisional figures, IIP grew by 2.08 per cent in January and by 4.62 per cent in February. The data herein was not complete, as information lines to the statistics department remained partly hit, the statistics office made clear.

The actual impact of the lockdown will be known only when figures for April are released, as this was the month in which there was a total paralysis of the economic activities existed across India.

The three major sectors — mining, manufacturing and electricity — saw a contraction, although the fall in manufacturing was the steepest. Manufacturing output contracted by 20.6 percent in March compared to growth of 3.2 percent in February. Electricity generation contracted by 6.8 percent compared to growth of 8.1 percent in February. Mining output was flat in March after it grew by 10 percent in February.

Industrial output, as classified by the end-use of goods, also showed a contraction in all categories. Capital goods and consumer durables saw the steepest fall in output.

Primary goods output contracted by 3.1 percent in March compared to growth of 7.4 percent in February. Intermediate goods output growth fell by 18.5 percent compared with 22.4 percent growth in the previous month

Contraction in consumer durables continued by 33.1 percent compared to a fall of 6.4 from February. Consumer non-durables output contracted by 16.2 percent after showing no growth in February. Infrastructure and construction goods output contracted by 23.8 percent compared with 0.1 percent rise in February

The release noted that the extent of contraction is the most severe in the case of capital goods and consumer durables, highlighting the pause in investment intentions and deferral of non-essential consumption. Aditi Nayar, principal economist at ICRA, said even consumer non-durables, which include several essential items, witnessed a contraction in output in March 2020, as the lockdown interrupted production in several factories.

It said that for the full financial year, IIP growth contracted for the first time since at least 1980-81. The index for industrial production has seen changes over the years in composition and weightage based on changing trends in the Indian economy. Industrial output over the April 2019 – March 2020 period contracted by 0.7 per cent as compared to a growth of 3.8 per cent the previous financial year.

Industrial production was weak even before the spread of Covid-19 disrupted economic activity. IIP grew by 0.9 per cent between April 2019- February 2020 on an annual basis, but the sharp fall in March led to a contraction in output for the full year. 

With the year-on-year performance of many lead indicators of manufacturing and services portraying an unfavourable trend in the just-concluded quarter, driven by the Covid-19 related disruptions, GDP growth is expected to slide to 2 per cent in Q4 FY20 from 4.7 per cent in previous quarter, despite the anticipated improvement in agricultural gross value added growth in that quarter, the statement found. –IHN-NN

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