Industrial production shrinks 0.3% in December

/ 1 min read

Data released by the National Statistical Office on February 12 shows that the output of the manufacturing sector—which constitutes 77.6% of IIP—declined 1.2%.

Motherson Sumi Systems factory in Noida.   
Motherson Sumi Systems factory in Noida.    | Credits: Sanjay Rawat

Casting a shadow on hopes of an economic revival, India’s index of industrial production (IIP) fell 0.3% in December 2019.

ADVERTISEMENT

Also, retail inflation rose to 7.59% in January 2020, much higher than the Reserve Bank of India’s target of 4%. It was 7.35% in December 2019.

The situation is worrisome, because in the five months till December the index fell except in November when it grew 1.8%. In August IIP fell 1.4%, in September, 4.3%, and in October, 3.8%.

Data released by the National Statistical Office on February 12 shows that the output of the manufacturing sector—which constitutes 77.6% of IIP—declined 1.2% compared to the 2.9% rise a year ago. More worrisome is that output of 16 of the 23 industry groups which make up the manufacturing segment contracted in December.

Capital goods industry, a proxy for future investments in the economy, too contracted 18.2%; in November it had fallen 8.6%. Infrastructure and construction goods output too fell 2.6%; in November it had fallen 3.5%.

Recommended Stories

Even consumption demand is yet to take off. Output of consumer durable items contracted 6.7% in December compared to the 1.5% fall in November. Similarly, consumer non-durables too contacted 3.7% against a growth of 2% in the previous month.

Components of IIP like electricity generation also dipped by 0.1% as against a 4.5% growth in December 2018. However, the mining sector showed a 5.4% growth.

ADVERTISEMENT

IIP for April-December of the current fiscal contracted 0.5%; in the year-ago period it had grown 4.7%.

Fortune India is now on WhatsApp! Get the latest updates from the world of business and economy delivered straight to your phone. Subscribe now.

Most Powerful Women In Business 2025
View Full List >