The reality of Modi’s Make in India: India sees biggest fall in industrial output in 8 years

The industrial output of the country fell the most in nearly eight years with all three industrial sub-segments showing output contraction, Bloomberg Quint (https://www.bloombergquint.com/business/industrial-production-contracts-the-most-in-nearly-eight-years) reported, citing government data that was released on Monday.

The Index of Industrial Production (IIP) showed a 4.3 per cent contraction in September, 2019 and a 1.1 per cent contraction in August as compared to the figures for same two months in 2018.

The data lends credence to widespread fears that the economy had slowed down further in the second quarter of the current fiscal year as compared to the first. Clubbing the two quarters together, industrial output rose by 1.3 per cent in the current fiscal as compared to a 5.2 per cent rise for the same two quarters last year.

Bloomberg Quint quoted Aditi Nayar, economist at ICRA Ratings. “The lead indicators point to a continued weakness in October 2019, which coupled with an unfavourable base effect, may well result in a further deterioration in the just-concluded month,” she said.

“Manufacturing output contracted by 3.9 per cent in September as compared to a contraction of 1.2 per cent in August. Seventeen of 23 manufacturing industry groups saw a contraction in output in September. Within the manufacturing segment, the segment of ‘motor vehicles, trailers and semi-trailers’ saw a fall of nearly 25 per cent in output,” the report added.

Even mining output fell by 8.5 per cent in September, 2019. In August, it had risen by 0.1 per cent.

Power generation decreased by 2.6 per cent. It had witnessed a 0.9 per cent contraction last month. Power generation is seen as an indicator of broader economic activities. This is the steepest fall in the present series.

Capital goods segment also saw its output decline for the ninth straight month.

“Primary goods contracted by 5.1 per cent in September as against a contraction 1.1 per cent in August. Intermediate goods growth was constant at 7 per cent in September. Capital goods output contracted by 20.7 per cent in September as compared to a contraction of 21 per cent last month. Infrastructure goods output contracted by 6.4 per cent compared with a contraction of 4.5 per cent in August,” the report added.

September, which usually sees an uptick in consumption with festivals coming close, saw the production of consumer durables and consumer non-durables contract by 9.9 per cent. It had contracted by 9.1 per cent in August.