Covid 19 pandemic continues to take a toll on the Indian economy. The country’s industrial production declined year-on-year by 16.6 per cent in June 2020, but the situation was somewhat better than May when contraction in factory production was near 34 per cent.
The Index of Industrial Production measures the growth or de-growth for every month and the data is released after a lag of about 40-42 days. For instance, the IIP data for June has been released in August by the Ministry of Statistics and Programme Implementation.
There are several sub-segments of IIP like manufacturing, mining, electricity. Then , there are segments like consumer goods, non-consumer goods etc.
Within the IIP, the manufacturing showed a drop of 17.1 per cent in June .
In a locked down economy, people are spending more on food, and other consumables (known as non-durables) , but are not able to or not willing to spend on things like air-conditioners, refrigerators, television sets (consumer durables) etc. This is shown in the data: Consumer non-durables grew by 14 per cent, against the overall declining trend-line. Durables dropped sharply by 35.5 per cent.
Whether investment is taking place in the economy or not? This is indicated by the performance of the capital goods segment. Here too, the figure is not encouraging. The industry was not really investing and spending on capital goods like plants and machinery; so it showed a de-growth of 36.9 per cent.
For the first quarter (April-June) of the financial year 2020-21, industrial output dropped by 35.9 per cent, according to the official data.