Industrial and core output: Good and bad news likely, here’s what that means for economy

By: |
Updated: Jan 28, 2020 11:47 AM

Partly driven by an unfavourable base effect, as much as 11 out of 18 economic indicators recorded a deterioration in the month of December.

IIP, industrial production, signs of recovery, economic slowdown, indian economyThe contraction of the core sector industries is likely to narrow further in December 2019.

The industrial output in December is once again expected to contract after a marginal recovery in the previous month. In the three months to October, India’s industrial output consecutively shrank on the back of slow economic growth. “Based on the weaker performance of the manufacturing sectors and non-oil exports, we expect the Index of Industrial Production to revert to a mild contraction in December 2019 from the modest growth in November 2019,” said credit rating agency ICRA in its report. However, it also said that the contraction of the core sector industries is likely to narrow further in December 2019, benefitting from the improvement in coal and electricity, which would offset the deterioration in crude oil and refinery output. 

Partly driven by an unfavourable base effect, as much as 11 out of 18 economic indicators recorded a deterioration in the month of December, compared to the previous months. The waning of the favourable base effects was observed in indicators such as crude oil production, non-oil exports, passengers carried by domestic airlines, and consumption of ATF, diesel, and petrol. 

Among these indicators, the performance of crude oil production was mainly affected. The crude oil production has reportedly worsened to 7.4 per cent in December 2019 from 6 per cent in the previous month. Also, the refinery output contracted by 1 per cent in December 2019, compared to 3.8 per cent growth in November 2019.

Also Read: India’s mobile handset exports more than double; overtake last year’s exports in just 8 months

On the brighter side, the growth in seven of the lead indicators such as the production of commercial vehicles, Coal India Limited (CIL), bank deposits as well as traffic-related to ports cargo and railway freight, displayed a sequential improvement in December 2019. The Indian economy has been going through a phase of a prolonged slowdown in recent months, however, signs of early recovery have started to appear as the rural part of the country has started to regain the lost momentum.

Do you know What is Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India, Expenditure Budget, Customs Duty? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Are you an honest taxpayer? PM Modi to give honours for pushing tax reforms journey
2States’ borrowings skyrocket due to coronavirus; these five states borrowed more than double this year
3El Salvador: A market on the rise for Indian companies