Industrial Output Index Falls By 34.7%

New Delhi : The index of industrial production (IIP) plunged to 88.4 in May from 135.4 a year before, according to official data released on Friday. This represented a 34.7% contraction, but government sources cautioned against making the year-on-year comparison, saying the May 2020 index may undergo significant revision, including more inputs.

The year-on-year contraction in output was recorded at 57.6% (revised) in April. The government, however, said the May IIP data indicated “a graded pickup in industrial activity in the economy. Industrial production had shrunk 18.3% y-o-y in March when the lockdown was announced, but it was only in April when the first full-month impact of it was experienced by industry. The IIP is expected to recover substantially in June, as lock-down-related curbs were lifted, facilitating the resumption of manufacturing.

In a statement on Friday, the National Statistical Office highlighted: “In view of the preventive measures and announcement of nation-wide lockdown by the government to contain spread of Covid-19 pandemic, majority of the industrial sector establishments were not operating from the end of March, 2020 onwards. This has had an impact on the items being produced by the establishments during the period of lockdown and the subsequent periods of conditional relaxations in restrictions.”

Not surprisingly, consumer durables saw a 68.5% slide in May and capital goods output was down by 64.3%. Consumer non-durables, however, witnessed only a 11.7% fall in May, thanks to the easing of curbs on the supply of essential items. Manufacturing contracted 39.3% in May, while mining dropped by 21% and electricity by 15.4%.