| Log in
Other Photo Credit: Reuters

Why industrial activity in India is in far worse shape than what headline IIP data show

10 October, 2016

For the second month in a row, India saw a decline in its factory output, which contracted 0.7% in August. While the mining sector was the worst hit, with a decline of 5.6%, manufacturing too was in the red.

Government data on the index of industrial production (IIP) released on Monday show that while production of capital goods declined sharply by more than 22%, that for consumer goods was up marginally by just over 1%.

This, effectively means that the government’s efforts at an economic revival have come to very little, with domestic demand not picking up, contrary to what the government has claimed. “”Good monsoon, pay commission, reasonable growth rate – domestic demand including rural demand has picked up,” Finance Minister Arun Jaitley said in Washington, on the sidelines of the annual fall meeting of the World Bank and the International Monetary Fund.  “”I think, with the kind of economic activities and investments that we have planned over the next several years it (growth) is not likely to go down,” Jaitley said.

Just last week, the Reserve Bank of India cut the benchmark interest rate by 25 basis points. In its bi-monthly monetary policy, the central bank said with a good monsoon and better sowing, the economy could witness growth as rural demand picks up.

Some of the commodities that brought down the overall index were insulated rubber cable, gems and jewellery, minerals, sugar machinery and rice, while those that contributed positively to the index were HR coils, alloy and stainless steel, mobile phones, fruit pulp and room air conditioners.

Like this report? Sign up for our daily newsletter to get our top reports.


Leave Your Comment
Weak manufacturing pulls down India's industrial activity in April

Weak manufacturing pulls down India’s industrial activity in April

TEAM VCC 1 year ago
Decline in manufacturing output weighed heavy on India’s industrial...
Industrial growth slowed in May despite rise in core sector industries

Industrial growth slowed in May despite rise in core sector industries

Ishaan Gera 2 years ago
Industrial output slowed as consumer goods firm reported declined in production...
Index of eight core industries slows for second consecutive month in February

Index of eight core industries slows for second consecutive month in February

Ishaan Gera 2 years ago
The index of eight core industries released by Office of the Economic Adviser...
No Comments

Why industrial activity in India is in far worse shape than what headline IIP data show

Powered by WordPress.com VIP