Factory output of India slows down to 2% in June

12 Aug 2019 Evaluate

India's factory output growth, measured by the Index of Industrial Production (IIP), slowed down for second straight month to 2.0% in June 2019 as compared to 7% in June 2018 and it is also lower than 3.1% in May 2019. The slowdown was mainly due to poor performance of the manufacturing and mining sectors and a contraction in the capital goods and consumer durables sectors. 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 2019 stood at 130.2, which is 2.0% higher as compared to the level in the month of June 2018. The cumulative growth for the period April-June 2019 over the corresponding period of the previous year stood at 3.6% as against 5.1% in the same period last year.

On the sectroal front, manufacturing sector grew 1.2% in June 2019, much lower than 6.9% a year ago. Mining growth dropped to 1.6% in June from 6.5% in the corresponding month of the last fiscal. The expansion in power generation sector stood at 8.2%, compared to 8.5% earlier. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of June 2019 stand at 106.6, 130.1 and 173.0 respectively. The cumulative growth in these three sectors during April-June 2019 over the corresponding period of 2018 has been 3.0%, 3.1% and 7.2% respectively.

Capital goods segment, which is a barometer of investment, saw a contraction of 6.5% in June compared to 9.7% growth a year ago. As per Use-based classification, the growth rates in June 2019 over June 2018 are 0.5% in Primary goods, 12.4% in Intermediate goods and (-) 1.8% in Infrastructure/ Construction Goods. The Consumer durables and Consumer non-durables have recorded growth of (-) 5.5% and 7.8%, respectively.

In terms of industries, 8 out of the 23 industry groups in the manufacturing sector have shown positive growth during the month of June 2019 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of basic metals’ has shown the highest positive growth of 17.7% followed by 16.5% in ‘Manufacture of food products’ and 10.3% in ‘Manufacture of tobacco products’. On the other hand, the industry group ‘Manufacture of paper and paper products’ has shown the highest negative growth of (-) 19.9% followed by (-) 14.3% in ‘Manufacture of furniture’ and (-) 13.9% in ‘Manufacture of motor vehicles, trailers and semi-trailers’.

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