Industrial production had shrunk by 18.3% Y-o-Y in March when the lockdown was announced. But it was only in April when the first full-month impact of it was experienced by industry.
The index of industrial production (IIP) crashed to 56.3 in April from 126.5 a year before, registering a massive 55.5% contraction, as most units remained shut due to a Covid-induced nation-wide lockdown. Industrial production had shrunk by 18.3% Y-o-Y in March when the lockdown was announced. But it was only in April when the first full-month impact of it was experienced by industry.
For a second straight month, the government didn’t release the headline retail inflation data (for May), highlighting the constraint in undertaking a meaningful and comprehensive data collection exercise because of the lockdown.
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The statistics ministry didn’t announce the rate of IIP contraction and just released the index reading for April. It stressed any comparison with the (year-on-year) growth rates for earlier months would be inappropriate, given the exceptional circumstances, and that “users may like to observe the changes in IIP in the following months”. Analysts, too, have cautioned against reading too much into the latest data. In April last year, industrial output had risen 3.2%.
As for inflation, the rates for certain subgroups were announced. Food inflation stood at 9.28% in May. While in March, retail food inflation touched 8.76%, data collection for April was hampered due to the lockdown.
On a month-on-month basis, the retail inflation in health rose 1.7% in May, reversing a 1.1% decline in April and suggesting a pick-up in health spending as the Covid-19 spreads its tentacles.
As for the IIP, the government said the lockdown “has had an impact on the items being produced by the establishments during the month of April when a number of responding units have reported nil production”.
Aditi Nayar, principal economist at ICRA, said: “The use-based categories of the IIP confirm our surmise that the lockdown has differentially impacted various sectors. The worst affected categories in April were consumer durables, capital goods and infrastructure/ construction goods, with end-demand severely constrained by the lockdown. In contrast, consumer non-durables, which include several essential items, and primary goods recorded a relatively moderate fall in the level of output in April.”