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Wednesday 29 January 2020

Industrial production at 8-year low in September

Most industrial groups registered negative growth rates in the period, reminiscent of 2011-12 when manufacturing had gone into a tailspin

The decline in industrial production in the country intensified during September. Its production fell by 4.3% after it had fallen 1.4% in August. According to government data, the overall industrial production declined due to the poor performance of several sectors including manufacturing and mining.

This is the worst Indian industrial performance in the last eight years. The Index of Industrial Production (IIP) had last been comparably low in October 2011 when the IIP had dropped by 5%.

Seventeen out of the 23 industry groups (as per 2-digit NIC-2008) in the manufacturing sector have shown negative growth in September 2019 when compared to the corresponding month of the previous year. The industry group “Manufacture of motor vehicles, trailers and semi-trailers” has shown the steepest decline in the form of -24.8% growth followed by a -23.6% growth in the manufacture of furniture and -22.0% growth in the manufacture of fabricated metal products, except machinery and equipment.

The industry group “Manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials” is an oasis with the highest positive growth of 15.5% followed by 9.2% in the manufacture of basic metals.

Low industrial production factors: 3.9% decline in manufacturing

The IIP had risen 4.6% in September last year. According to the government data, the manufacturing sector’s production fell by 3.9% in September this year as against 4.8% growth in the sector last year.

In many areas including automobile and realty, the condition is very bad due to slackening demand. This is impacting the performance of the manufacturing sector.

Another industrial factor: Mining production fell 8.5%

Production in the energy sector declined by 2.6% as compared to 8.2% growth in the previous year. Mining production fell by 8.5% as compared to 0.1% growth in the previous year.

IIP had fallen in August, too

The economic situation in the country is continuously deteriorating. Industrial production performance in September is the worst in the past eight years. Earlier in 2011, the decline in industrial production touched such a low level.

The growth rate of industrial production has been negative since August. Industrial production fell 1.4% in August.

Things got worse in September when the growth in manufacturing was -3.9%, that in mining was -8.5%, in capital goods -20.7%, in infrastructure goods -6.4%, in electrical production -2.6%, in primary goods -5.1%, in consumer durables -9.9% and in consumer non-durables -0.4%.

The Central Statistics Office (CSO) data show a 4.3% contraction, the deepest in the 2011-12 IIP series, which was unveiled in May 2017. The IIP had declined by 0.7% in April 2012.

In the April-September 2019 period, the IIP grew a modest 1.3%, lower than the 5.2% expansion in the same period last year.

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