NEW DELHI: India’s Industrial production contracted by 10.4 per cent in the month of July, for the fifth month in a row. However, the decline was less steeper than the previous months as industrial activity started resuming. The contraction has eased compared to the 16.6 per cent contraction in June. The IIP has witnessed 4.3 per cent growth in July last year.
“With the lifting of restrictions in the subsequent periods, industrial activity is resuming. The Index for the month of July 2020 stands at 118.1 as compared to 54.0, 89.5 and 108.9 for April, May and June,” according to the Ministry of Statistics and Programme Implementation. Data from National Statistical Office showed that while electrcity generation fell 2.5 per cent with improvement in power demand and Mining recording contraction of 13 per cent during July.
Manufacturing, which accounts for 78 per cent of the IIP, saw contraction of 11 per cent, and out of 23 industries all showed contraction barring tobacco and pharmaceutical. Capital goods segment, which denotes investment in industry, contracted by 22.8 per cent in July, continuing its eighteenth consecutive monthly decline, the data showed.
On use-based classification, primary goods, capital goods and intermediate goods saw factory output decline of 10.9 per cent, 22.8 per cent and 12.5 per cent, respectively. Infrastructure and construction goods reported a fall of 10.6 per cent in industrial production. Consumer durable segment continued to show high contraction shrinking by 23.6 per cent.
Only consumer non-durables, which include essential items, registered a 6 per cent growth. According to Aditi Nayar, principal economist at ICRA, the pace of contraction could ease further to 6-8 per cent in August.
On the path to recovery
The contraction in capital goods output, an indicator for investment activity, too was softer in July at 28.8 per cent than the 36.8 per cent fall seen in the previous month.