Continuing the contraction streak for the second quarter in a row, the manufacturing GVA again shrank by 0.2 per cent in Q3 FY20.
The manufacturing sector, which Prime Minister Narendra Modi had projected as the new driver of the Indian economy, has been crawling throughout the current financial year so far. Narendra Modi had made manufacturing growth a cornerstone of his first term, which would help make India an export hub with his Make in India campaign, generating thousands of jobs. Continuing the contraction streak for the second quarter in a row, the manufacturing GVA again shrank by 0.2 per cent in Q3 FY20, according to the Ministry of Statistics and Programme Implementation (MOSPI). The manufacturing GDP growth has been severely hit since the beginning of the current fiscal.
The manufacturing sector grew at 10.7 per cent, 5.6 per cent, and 5.2 per cent in Q1, Q2 & Q3 respectively in the previous fiscal, which substantially fell to 2.2 per cent in Q1 FY20, and contracted by 0.4 and 0.2 per cent in Q2 and Q3. The manufacturing sector of the country is undergoing a downturn as the index of industrial production (IIP) contracted in two out of three months in the third quarter. IIP contracted by 4 per cent in October and 0.3 per cent in December. What came as a surprise is a contraction in the IIP even as the Purchasing Managers’ Index is highly optimistic.
Meanwhile, the manufacturing sector is not an exception to slow growth. The electricity, gas and water supply sector has also contracted by 0.7 per cent in the third quarter. The agriculture sector grew at 3.5 per cent in Q3, while mining and construction sectors grew at 3.2 per cent and 0.3 per cent respectively.