2020’s low base fuels 134% rise in April IIP
NEW DELHI: India’s factory output grew 134% in April, lifted by an extraordinary base effect as industrial activity ground to a halt the same month a year earlier due to the national lockdown to limit the spread of Covid-19.
In April 2020, the Index of Industrial Production (IIP) had contracted 55.5%. The favourable base may bump up IIP till August this year.
On a sequential basis, IIP shrank 13% in April against a 12.3% growth in March, reflecting the hit to production activity.
Most economists suggested looking through the exaggerated growth number, which presents a false sense of normalcy even as the rampaging second wave of the pandemic in April forced many states to impose curbs, hurting industrial activity.
The National Statistical Office did not formally compute the April IIP numbers, though it provided the indices for the month. “It may be noted that the nationwide lockdown and other measures implemented to restrict the spread of covid pandemic from the end of March 2020, had led to a majority of the establishments not operating in April 2020 and, consequently, there were many units that reported ‘Nil’ production, affecting comparison of indices for April 2020 and April 2021,” it said.
Madan Sabnavis, chief economist at Care Ratings, said IIP growth numbers in April were bound to be exaggerated this year as output had come to a standstill in most sectors last year. “Therefore, the growth numbers for April, which are exceptionally high, need to be ignored. A similar situation would arise in May, too, and it would be only from June that there could be reasonable numbers forthcoming. It would be better to track PMI, e-way bills and GST collections to get a fair assessment of activity,” he said.
Most economic forecasters have cut their GDP projections for FY22 to single digits as the second wave of the pandemic is expected to have a lingering
NEW DELHI: An exponential surge in Covid-19 cases across the country and the consequent lockdown measures by states have led to a sharp decline in domestic wholesale dispatches of automobiles across categories for the second consecutive month in May on a month-on-month (m-o-m) basis.
Sales of passenger vehicles decreased by 66.34% on a m-o-m basis to 88,045 units in May, as a result of a 70.5% drop in sales of passenger cars to 41,536 units and a 58.5% decline for utility vehicles to 45,158 units, according to sales data released by Society of Indian Automobile Manufacturers (SIAM) on Friday.
Maruti Suzuki India, India’s largest carmaker, reported a 74.2% m-o-m fall in sales to just 35,293 units during the month. The second-largest carmaker, Hyundai Motor India, reported a drop in vehicle dispatches by 48.9% to 25,001 units. impact on consumer sentiment and hamper rural demand. The World Bank earlier this week pared its growth projection for India to 8.3% for FY22 from 10.1% estimated in April.
But with cases moderating and a phased unlocking underway, sequential momentum may gain pace, beginning June. Research agency Quanteco’s Daily Activity and Recovery Tracker (DART) index clocked a third consecutive weekly expansion in economic activity for the week ended June 6. “With the continued ebbing of Covid cases, recovery in economic activity is expected to gradually pick up,” said Yuvika Singhal, an economist at Quanteco Research.