Industrial output contracts 2.2% in June; forecast bleak

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SummaryThe industrial output as measured by the Index of Industrial Production (IIP) shrank 2.2 per cent in June

Indiaís factory output contracted for the second month in a row in June as the manufacturing and mining activity continued to decline while the electricity generation remained flat.

The industrial output as measured by the Index of Industrial Production (IIP) shrank 2.2 per cent in June as compared to a contraction of 2 per cent in the same month a year ago. The IIP in May declined 2.8 per cent, revised from negative 1.6 per cent, according to the data released by the government today.

The dismal performance of the key eight infrastructure industries, including coal, crude oil, electricity, natural gas, fertilisers, steel, cement and refinery products, which has a weight of over 37 per cent in the IIP, also impacted the overall industrial production growth. The core sector growth remained flat at 0.1 per cent in June.

As per the IIP data, the manufacturing sector, which has the maximum weight of over 75 per cent in the overall index, contracted 2.2 per cent in June as against a contraction of 3.2 per cent during the corresponding year-ago period.

The mining sector also saw a decline in the production, contracting 4.1 per cent in June as against a decline of 1.1 per cent during the corresponding year-ago period.

Basic and capital goods, a barometer of the investments in the economy, continued to remain in the negative zone during the month, while consumer non-durables showed a growth of 5 per cent as compared to a contraction of 0.5 per cent during the same period a year ago.

The production of capital goods was down 6.6 per cent compared to contraction of 27.7 per cent during the same period last month, while that of basic goods was down 1.9 per cent as against a growth of 3.6 per cent during the corresponding year-ago period.

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