A sharp fall in manufacturing and mining activities led to a slump in India’s industrial output in February.
Data released by the Ministry of Statistics and Programme Implementation on Monday showed that the Index of Industrial Production (IIP) for February contracted by 3.6 per cent over the same month a year ago.
On a sequential basis, the IIP had contracted by 0.87 per cent. For the April-June period of the previous financial year, it fell by 11.3 per cent.
“For the month of February 2021, the ‘Quick Estimates of Index of Industrial Production’ (IIP) with base 2011-12 stands at 129.4.
“The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of February 2021 stand at 116.5, 129.3 and 153.9, respectively. These ‘Quick Estimates’ will undergo revision in subsequent releases as per the revision policy of IIP.”
Among the major segments, manufacturing production fell by 3.7 per cent from a growth of 3.8 per cent reported for the corresponding month of 2020.
Similarly, mining output de-grew 5.5 per cent on a YoY basis from 9.6 per cent in the corresponding month of the previous year.
However, electricity generation inched up by 0.1 per cent from a rise of 11.5 per cent during February 2020.
Furthermore, the data on a YoY basis showed that manufacturing of primary goods de-grew by 5.1 per cent, while capital goods production fell by 4.2 per cent, and intermediate goods plunged by 5.6 per cent.
Similarly, the production of infrastructure or construction goods fell by 4.7 per cent, however, consumer durables’ production grew by 6.3 per cent.
The sub-segment of consumer non-durables showed a growth of 3.8 per cent.
“The pace of contraction in industrial output worsened in February 2021 to a deeper-than-expected 3.6 per cent, with a deterioration across all the three sectors,” said Aditi Nayar, Chief Economist, ICRA.
“The IIP has displayed a sombre trend in the last six months, with three months of contraction interspersed with three months of tepid growth. On average, the IIP has risen by a marginal 0.1 per cent in September 2020-February 2021, highlighting that the recovery in industrial volumes lacks conviction.”
Devendra Kumar Pant, Chief Economist, India Ratings and Research, said: “Contraction in IIP growth in February 2021 can be attributed to base effect… February 2020 growth was 16 months high. The data trend of past few months therefore reinforces the view that the uptick witnessed in the month of September 2020 and October 2020 was more due to a combination of festive and pent demand and we are still far from witnessing a sustained recovery.”
“Growth pattern of primary and intermediate goods, two leading indicators of industrial production are pointing towards a lacklustre industrial performance in short- to medium-run. This also means the government and the RBI will have to continue to support the demand.”