IIP growth turns positive in September, rises 0.2%

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IIP growth turns positive in September, rises 0.2%

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The index of industrial production (IIP) rose by 0.2 per cent in September 2020 compared to its year-ago level. This was the first month since the lockdown when the index reported a year-on-year growth. Shivani Sharma, Mohsin Shaikh

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Mining activity grew to a 7-month high of 1.4% in September 2020 compared with (-)8.6% growth in the corresponding period last year. Low base effect coupled with resumption of industrial activity and increase in power demand has led to the growth during the month.

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Manufacturing which has the highest weightage (77.6%) in the IIP has fallen for the seventh consecutive month and recorded negative growth of (-)0.6% in September compared with (-)4.3% in September 2019 and (-)7.9% in August 2020.

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Electricity output grew by 4.9% in September 2020, its highest pace in the last 8 months compared with negative growth of (-)2.6% in September 2019. Favorable base effect, higher industrial activity and resumption of commercial offices during the month has driven growth in the sector.

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Infrastructure goods have barely moved in the positive territory with a growth of 0.7% in September after 6 consecutive months of negative growth.

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The growth in consumer durables (2.8%) and consumer non-durables (4.1%) is the biggest positive in the IIP classifications for September. This reflects improvement in consumer demand in the economy and reflects additional production by companies ahead of the festive season.

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Although growth in industrial production of capital goods (-3.3%) is negative for 21 consecutive months, the sharp improvement seen in this segment from the previous month is reflective of investment activity picking up in the economy.