India’s factory output grows 22.4% in March due to low-base effect

13 May 2021 Evaluate

India’s factory output, measured in terms of the Index of Industrial Production (IIP), after contracting for two straight months, entered into positive territory and witnessed a growth of 22.4 per cent in March, mainly due to the low-base effect and good show by manufacturing, mining and power sectors. Industrial production had plunged 18.7 per cent in March last year following the COVID-19 outbreak and remained in the negative zone till August 2020.

With the resumption of economic activities, factory output posted a rise of one per cent in September. The IIP had grown by 4.5 per cent in October. In November 2020, the factory output fell 1.6 per cent, and it again entered the positive territory by growing 2.2 per cent in December 2020. The IIP had recorded a contraction of 0.9 per cent in January and 3.4 per cent in February this year. During 2020-21, the IIP contracted 8.6 per cent as against 0.8 per cent contraction in 2019-20.

The data released by the National Statistical Office (NSO) under Ministry of Statistics and Programme Implementation showed that for the month of March 2021, the Quick Estimates of IIP with base 2011-12 stood at 143.4. The manufacturing sector -- which constitutes 77.63 per cent of the IIP -- grew by 25.8 per cent in March 2021. The mining sector output too grew 6.1 per cent in March, while power generation increased by 22.5 per cent. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of March 2021 stand at 139.0, 140.4 and 180.0 respectively.

The output of capital goods, which is a barometer of investment, grew by 41.9 per cent in March 2021, as against a contraction of 38.3 per cent a year ago. Consumer durables manufacturing increased by 54.9 per cent in the month under review, compared to a 36.8 per cent decline in March 2020. Consumer non-durable goods production grew 27.5 per cent in March this year, compared to a contraction of 22.3 per cent in the year-ago period.

As per Use-based classification, the indices stood at 144.8 for Primary Goods, 103.0 for Capital Goods, 152.3 for Intermediate Goods and 154.3 for Infrastructure/ Construction Goods for the month of March 2021. Further, the indices for Consumer durables and Consumer non-durables stood at 128.9 and 155.2 respectively for the month of March 2021.

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