Industrial production (IIP) of India grew at 2 per cent in the month of June, which is a 3-month low. Dip in IIP growth rate has been mainly driven by the slowdown in the manufacturing sector.
Industrial production (IIP) of India grew at 2 per cent in the month of June, which is a 3-month low. Dip in IIP growth rate has been mainly driven by the slowdown in the manufacturing sector. The manufacturing grew at a mere 1.2 per cent in June 2019. The IIP growth rate stood at 3.1 per cent in May 2019 and 7 per cent in June 2018. The substantial growth in intermediate goods and consumer non-durables provided some relief amidst the disappointing contraction in the other three major categories. The growth rate of capital goods, infrastructure and construction goods and consumer durables has remained negative in the month of June. Capital goods grew at -6.5 per cent, infrastructure and construction goods grew at -1.8 per cent and consumer durables grew at -5.5 per cent in the month of June, according to the report released by CSO on Friday.
The growth rate of the production of products related to textiles, leather, paper, petroleum, and chemical has also contracted in the month of June. Manufacturing of motor vehicles, trailers and semi-trailers grew at -13.9 per cent in June, while its growth rate remained -8.4 per cent in the first quarter of the current financial year.
“The mild 3.6% industrial expansion in Q1 FY20, subdued earnings in several sectors, muted government expenditure prior to the presentation of the Union Budget and the unfavourable rabi harvest of most crops, suggest that GDP growth may be capped at around 6.1% in the just-concluded quarter,” said Aditi Nayar, Principal Economist, ICRA. A sharp decline of five per cent in the output of Coal India Limited and the news reports of a continued fall in auto production in July 2019 would also weigh upon the industrial growth in that month, she added.