IIP contracts to four-year low of 0.1% in June

14 Aug 2017 Evaluate

With the sharp fall in capital goods production and decline in manufacturing sector, India’s industrial output contracted by 0.1% in the month of June 2017, as compared to an expansion of 8% in the previous year-ago period, also lower than 2.8% growth in May. This reading was a four-year low since June 2013.Segments like mining, power generation, infrastructure/construction goods and consumer durables recorded poor performance. Besides, data for growth in the Index of Industrial Production (IIP) for May was revised to 2.8%.

As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2011-12 for the month of June 2017, stood at 119.6, which is 0.1% lower as compared to the level in the month of June 2016. However, the cumulative growth for the period April-June 2017 over the corresponding period of the previous year stood at 2.0%. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of June 2017 stand at 98.8, 120.6 and 147.4 respectively, with the corresponding growth rates of 0.4%, (-) 0.4% and 2.1% as compared to June 2016. The cumulative growth in these three sectors during April-June 2017 over the corresponding period of 2016 has been 1.2%, 1.8% and 5.3% respectively.

The fall in capital goods output, which is the barometer of investment, was lowest since September 2016, as it shrank 6.8% in June, compared to a 3.9% contraction in the previous month and a growth of 14.8% a year ago. Among the other use-based categories, Primary goods were (-) 0.2%, Intermediate goods were (-) 0.6% and Infrastructure/ Construction Goods were 0.6%. The Consumer durables and Consumer non-durables have recorded growth of (-) 2.1% and 4.9% respectively.

In terms of industries, fifteen out of the twenty three industry groups in the manufacturing sector have shown negative growth during the month of June 2017 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of electrical equipment’ has shown the highest negative growth of (-) 20.1% followed by (-) 11.1% in ‘Manufacture of fabricated metal products, except machinery and equipment’ and (-) 10.5% in ‘Printing and reproduction of recorded media’. On the other hand, the industry group ‘Other manufacturing’ has shown the highest positive growth of 28.1% followed by 19.2% in ‘Manufacture of pharmaceuticals, medicinal chemical and botanical products’ and 11.7% in ‘Manufacture of furniture’.

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