Economics – Industrial Index of Productivity (IIP) contracts record 55.5% in April

IIP Overview

The industrial production of Asia’s second largest economy fell by a record🔻55.5% in April, the sharpest fall in history, as Covid-19 pandemic forced India and its economy to go into a lockdown

In March, industrial output fell by🔻18.3%, due to a one-week lockdown declared by Prime Minister Modi on 24^th May 2020.

Majority of industrial units has reported zero level of productions and also cautioned that numbers should not be compared with previous months

According to WODS, IIP is a very important tool to understand the impact of lockdown triggered by Covid-19 pandemic on various sectors of the economy.

“We have analyzed the Y-o-Y contraction levels in the IIP data across several sectors in order to identify and estimate the time limits in which economic activities will be normalized” says Souvik Dey, Analyst at Profit Maker

Statistical Analysis of IIP (Apr 2019 – Apr 2020)

India's industrial production plunged an upwardly revised 55.5 percent year-on-year in April 2020, compared to an 18.3 percent fall in March 2020. It is the steepest decline since records began in 1994 and much worse than market expectations

With an unprecedented lockdown in force for most of April, the government on Friday released only index numbers for industrial production, and the numbers cited above are derived from them. The government has not released industrial output data and many economists are complaining of missing industrial output data

The government clarified that the majority of industrial establishments had reported nil production, and cautioned that the numbers should not be compared with those of previous months.

Sector-wise snapshot for April 2020

🠋 Manufacturing, which accounts for 78 per cent of the IIP, came to a halt in April as output fell by 64.2 percent. All the 23 sub-sectors within manufacturing posted year-on-year contraction, the same as the previous month. More than 19 industries reported output contraction of more than 50%

🠋 Mining activity also caved by 27.3 percent, after remaining relatively unscathed in March

🠋 Electricity generation managed to stem the decline at a modest 22 per cent as domestic demand shot up. Generation had fallen by 8.2 percent in March

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