Industrial ouptut drop slows in June as factories open

Industrial production declined by 16.6% in June, mainly due to lower output of manufacturing, mining and power generation, as per the government data released on Tuesday.

According to the Index of Industrial Production (IIP) data, manufacturing sector production registered a decline of 17.1%, while the output of mining and power fell 19.8% and 10%, respectively.

In a press release, the Ministry of Statistics and Programme Implementation issued a disclaimer saying that "it may not be appropriate to compare the IIP in the post-pandemic months with the IIP for months preceding the COVID-19 pandemic".

However, on a monthly basis, the Index of Industrial Production has shown improvement. The index, which was 53.6 in April, improved to 89.5 in May and 107.8 in June, the data revealed.

The IIP had expanded by 1.3% year-on-year in June 2019.

The data further revealed that the contraction in the consumer durables and capital goods segment was 35.5% and 36.9%, respectively during June 2020.

However, consumer nondurables segment posted a growth of 14%.

The IIP for April-June period has contracted by 35.9%, according to the data. It had registered a growth of 3% during the same period last fiscal.

In view of the preventive measures and announcement of a nationwide lockdown by the government to contain the spread of COVID-19 pandemic, a large number of industrial sector establishments were not operating from March-end, 2020 onwards.

This has had an impact on the items being produced by the establishments during the period of lockdown. With the lifting of restrictions in the subsequent periods, industrial activity is now resuming. The massive fall in industrial output in Apr-Jun is an indication of how much the GDP could suffer during the quarter.

There are already signs of the momentum losing steam in July, with many states forced to re-impose lockdowns due to a surge in coronavirus cases. The manufacturing Purchasing Managers' Index, for instance, edged down to 46.0 in July from 47.2 in June.