India's industrial output, measured in Index of Industrial Production (IIP), expanded 4.5 per cent during February, compared to 0.2 per cent recorded in the same period last year. This was the second consecutive month of improvement in factory output, led by growth in mining, manufacturing and electricity sector, which rose to 10 per cent, 3.2 per cent and 8.1 per cent, respectively. The industries output is likely to fell sharply in March as businesses faces a big economic challenge in the wake of Centre's 21-day lockdown announced in the view of coronavirus outbreak.
"The Quick Estimates of Index of Industrial Production (IIP) with base 2011-12 for the month of February 2020 stands at 133.3, which is 4.5 per cent higher as compared to the level in the month of February 2019," the data showed.
As per the data released by the Ministry of Statistics & Programme Implementation, the cumulative growth for April-February 2019-20 period stood at 0.9 per cent, over the corresponding period of the previous year.
During April-February 2019-20, the cumulative yearly growth for the mining, manufacturing and electricity sectors stood at 1.9 per cent, 0.6 per cent and 1.5 per cent, respectively.
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In terms of industries, 13 out of the 23 industry groups in the manufacturing sector have shown positive growth during February 2020 versus February 2019.While primary goods grew by 7.4 per cent in February, intermediate goods output expanded by 22.4 per cent in the previous month.
Meanwhile, capital goods and consumer durables production contracted 9.7 per cent and 6.4 per cent, respectively.
Commenting on IIP numbers, Rajani Sinha, Chief Economist & Head Research at Knight Frank India, said, "IIP growth of 4.5 per cent for February is the second consecutive month of improvement. The improvement is mainly because of sharp jump in intermediate goods, even while data for capital goods and consumer goods remain weak."
"There is not much to cheer from this data as IIP growth is likely to sharply fall going forward due to the impact of COVID 19 crisis. Even after the lockdown is lifted, demand for consumer discretionary items will take time to recover given the poor consumer sentiments in midst of job losses and pay cuts. Capital goods demand will also remain weak as businesses will be wary of capex in these uncertain times," she added.
Date released earlier this month showed that India's eight infrastructure sectors, which contribute over 40 per cent of the index of industrial production (IIP), grew at an 11-month high of 5.5 per cent in February. The growth of eight core industries was driven by double-digits growth in coal and electricity sector. On the flip side, crude oil, natural gas, and steel saw a contraction in the output.
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