Factory output in April may have shrunk by 40%; one week lockdown pushed March IIP to record low

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Published: June 4, 2020 2:24 PM

Following the worst contraction ever -- 16.7 per cent -- in March, on the account of only a week’s lockdown, the industrial production likely shrunk by 35-40 per cent in April 2020.

IIP, industrial production, IIP in april, iip in march, factory outputThe manufacturing sector may have contracted by 40-45 per cent; mining by 15-20 per cent; and electricity production by 20-25 per cent in April 2020. 

India’s factory output may have severely contracted in the month of April 2020 too. Following the worst contraction ever — 16.7 per cent — in March, on the account of only a week’s lockdown, the industrial production likely shrunk by 35-40 per cent in April 2020, said a report by Care Ratings. The rating agency has also predicted that the manufacturing sector contracted by 40-45 per cent; mining by 15-20 per cent; and electricity production fell by 20-25 per cent in the month. Even as some relief in lockdown restrictions were given after April 20, the first 20 days of the month saw a strict lockdown, forcing businesses and industries to shut down operations.

The government is yet to release IIP data for the month of April, however, the all-time low industrial production in March led by only a week’s lockdown suggests a gruesome figure for April, when the lockdown stayed for the full month. Manufacturing PMI, which is a leading indicator to gauge the industrial production, also fell to a record low of 27.4 in April from 51.8 in March 2020. The IHS Markit survey showed that new orders fell for the first time in two-and-a-half years and at the sharpest rate in the survey’s history, far outpacing that seen during the global financial crisis.

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Even as the mining sector was classified under essential activity, severe labour shortages and lower demand led are expected to have weighed on the production. The rating agency has also estimated that the industrial output was almost nil as the production of motor vehicles, transport equipment, metals among other products was stopped.

Even the industries such as textiles, wearing apparel, chemicals, and refined petroleum products, which were partially allowed to carry out operations, are expected to see a contraction in April. Meanwhile, the essential goods such as food products saw an uptick in production during the month due to panic-driven demand by consumers for stocking, the report added.

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