India's industrial production down 1.6% year-on-year in January
16 March 2021
Industrial production in the country declined by 1.6 per cent year-on-year in January2021, despite the 0.4 per cent growth in real GDP recorded in fiscal third quarter (October-December 2020-21), belying the government’s claim of the beginning of a broad-based economic recovery.
Industrial output had risen by 1.6 per cent in December, according to revised estimates.
The decline in industrial production has badly affected the manufacturing sector, which has over 77 per cent weightage in the index of industrial production (IIP), contracting by 2 per cent, against the 2.1 per cent growth recorded in December 2020.
The data points to recovery still being patchy and the rising covid cases could cast a shadow over the momentum in coming months.
He December IIP figure of 135.9 was higher than pre-Covid February 2020 figure of 134.2 showing that the economy is in the recovery mode.
However, many of the subsectors within the broader manufacturing category are still showing patchy recovery.
The recovery process which gained momentum recently could face some resistance from the rising coronavirus cases in the country. States like Maharashtra have hinted that lockdowns could be imposed in some parts where cases have shown a spike.
Core sector, which forms 40.27 per cent of the IIP, grew at 0.1 per cent in January. The second advance estimates have pegged economic contraction at 8 per cent in the current fiscal. Economic growth is expected to bounce back sharply in the next fiscal on the back of resurgence in economic activity as well as low base effect.