Industrial output contracted 17% in March 2020 due to COVID-19

India's industrial output contracted in March as the spread of the COVID-19 virus began to disrupt economic activity from the middle of the month. Industrial output of India grew by 2.08 per cent in January, 2020 and by 4.62 per cent in February, 2020.

Text by Shivani Sharma

For the month of March 2020, the Index of Industrial Production (IIP) with base 2011-12 stands at 120.1. The country's industrial output declined by 16.7 per cent in March, on account of poor show by mining, manufacturing and electricity mainly due to the nationwide lockdown.

Manufacturing output contracted by 20.6 per cent in March compared to growth of 3.2 per cent in February. All categories of manufacturing industries showed a contraction in production in March, with the worst affected being the automobile sector, which saw a 50 per cent decline.

Electricity generation contracted by 6.8 per cent compared to growth of 8.1 per cent in February. For the year Apr 2019-Mar 2020, the Y-O-Y growth is 1.1 per cent.

Mining & quarrying activity recorded flat growth. Mining activities have halted during the lockdown. And there is no growth in the sector. Mining output was flat in March after it grew 9.7 per cent in February.

Industrial output, as classified by the end-use of goods, also showed a contraction in all categories. Capital goods and consumer durables saw the steepest fall in output. Primary goods output contracted by 3.1 per cent in March compared to growth of 7.4 per cent in February.

Intermediate goods output growth fell by 18.5 per cent compared with 22.4 per cent growth in the previous month. As per use-based classification, the indices stand at 125.8 for Intermediate Goods.

Worse still were capital goods. The capital goods segment, which denotes investment in industry, contracted 35.6 per cent in March, following February's 9.7 per cent growth, highlighting the pause in investment intentions and deferral of non-essential consumption.

Contraction in consumer durables continued by 33.1 per cent compared to a fall of 6.4 from February. The fall in consumer durables was steeper than the fall in consumer non-durables. The extent of contraction is the most severe in the case of capital goods and consumer durables, highlighting the pause in investment intentions and deferral of non-essential consumption.

Consumer non-durables output contracted by 16.2 per cent after showing no growth in February. The indices for Consumer durables and Consumer non-durables stand at 88.1 and 131.2 respectively for the month of March 2020.

Infrastructure and construction goods output contracted by 23.8 per cent compared with 0.1 per cent rise in February. Industrial output, as classified by the end-use of goods, also showed a contraction in all categories. The reason for the fall is Primary goods output contracted by 3.1 per cent in March compared to growth of 7.4 per cent in February.