India's industrial output measured by the Index of Industrial Production (IIP) is back in positive territory after a six-month contraction to grow by 0.2% year-on-year (y-o-y) in September. In August, it shrunk by 8%.
The September IIP growth was marked by a positive rise in both electricity and mining whilst the key category of manufacturing is still in the negative territory, registering a decline of 0.6%. The speedy recovery is cushioned by a turnaround in the core sector output which shrunk at its slowest pace at 0.8% this fiscal.
The core sector output constitutes 40.27% of the IIP. Meanwhile, the output of mining and power segments grew by 1.4 per cent and 4.9 per cent, respectively.
The IIP contracted by 4.6 per cent in September 2019. With the gradual relaxation of restrictions, there has been a relative improvement in economic activity by varying degrees as well as in data reporting, the Ministry of Statistics and Programme Implementation said in a statement on Thursday, November 12.
It may not be appropriate to compare the IIP in the post-pandemic months with the IIP for months preceding the COVID-19 pandemic, it added.
The Reserve Bank of India (RBI) in its newly introduced 'nowcast' has pegged a faster than expected economic recovery supported by a strong set of high-frequency macro data.
The central bank expects the Indian economy to manifest growth in the October-December quarter (of FY21). However, the RBI has predicted the economy to contract by over 8% in the second quarter of the current fiscal year.
Coupled with the historic contraction of 24% in the first quarter, the central bank has said that India has entered a "technical recession".
The hopes of a quick recovery have been manifested in the updated estimates of other agencies too with Moody's upping its growth prediction for 2020 to -8.9% from -9.6% earlier.
It raised the growth outlook on hopes of a more sound economic activity happening owing to an improving recovery rate for coronavirus cases.
In addition, the Centre's consecutive push through Atmanirbhar packages, announced by finance minister Nirmala Sitharaman on Thursday, November 12, will add only boost the economic revival process. Coupled with Thursday's package, the total stimulus is now around 15% of the GDP (gross domestic product).
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