IIP shrinks again in July; contraction narrows but manufacturing, mining still fall in double digits

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Updated: Sep 11, 2020 6:02 PM

The index of industrial production fell by 10.4 per cent in the month of July, after contracting by 33.9 per cent in June and 57.6 per cent in April 2020. 

PMI, IIP, factory output, contraction in JulyThe effect of lockdown-led disruptions is still seen in the manufacturing sector, however, the pace of contraction has slowed in recent months.

India’s factory output continued to shrink for the fifth month in a row in July. After Prime Minister Narendra Modi announced a lockdown to arrest the spread of the coronavirus pandemic in the last week of March, industrial activity came to a standstill. The effect of lockdown-led disruptions is still seen in the manufacturing sector, however, the pace of contraction has slowed in recent months. The index of industrial production fell by 10.4 per cent in the month of July, after contracting by 33.9 per cent in June and 57.6 per cent in April 2020. 

In the month of July, mining shrank 13 per cent while manufacturing and electricity output fell 11.1 per cent and 2.5 per cent respectively.  The Ministry of Statistics & Programme Implementation (MOSPI) today said that it may not be appropriate to compare the IIP in the post-pandemic months with the IIP for months preceding the coronavirus pandemic. It added that with the lifting of lockdown restrictions, industrial activity is resuming as the index for the month of July 2020 stands at 118.1, compared to 54.0, 89.5, and 108.9 for April, May, and June 2020. Capital goods and consumer durables also took a major hit in the month of July as they fell 22.8 per cent and 23.6 per cent respectively in the month.

Also Read: States’ fiscal deficit doubles in Q1: Tax, stamp duties collections in free fall; these states hit most

Meanwhile, there are hopes that industrial production has significantly revived in the month of August as India’s manufacturing activity expanded for the first time in the last five months in August 2020. The manufacturing PMI stood at 52 in August, compared to 46 in July, said a recent IHS Markit report. The production growth was largely driven by greater client demand for Indian goods and the new business received by Indian manufacturers also expanded at the fastest pace since February. 

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