Most of the
economic activity in the country had come to a standstill after the government
imposed a 21-day nationwide lockdown beginning March 25 to check the spread of
coronavirus.
India's
industrial production contracted by a record 16.7 per cent in March as
restrictions imposed to curb the spread of coronavirus hit manufacturing and
consumption.
The
contraction in March came on the back of factory output rising to a seven-month
high of 4.5 per cent in February before the government imposed a nationwide
lockdown that crippled economic activity.
Manufacturing
output contracted by 20.6 per cent in March from a year earlier, while
electricity output shrank 6.8 per cent, according to official data released on
Tuesday.
The
mining output was flat in March.
The
Index of Industrial Production (IIP) had grown by 2.7 per cent in March 2019.
Most
of the economic activity in the country had come to a standstill after the
government imposed a 21-day nationwide lockdown beginning March 25 to check the
spread of coronavirus.
The
lockdown has since been extended twice through May 17, with some relaxations to
allow the resumption of economic activity.
The
industrial output for 2019-20 ending March contracted 0.7 per cent over the
previous fiscal.
The
production output of eight core industries declined by 6.47 in March, down from
7.1 per cent in the previous month.
Separately,
the government did not release headline retail inflation figures for April
citing inadequate data collection under the lockdown.
The
ministry of statistics said data are usually collected from 1,114 urban markets
and 1,181 villages through personal visits, which have been suspended since
March 19.
Commenting
on the data, Suman Chowdhury, chief analytical officer, Acuite Ratings &
Research, said March IIP print does not only reflect the impact of the
disruptive COVID lockdown, which started in stages from mid-month but also the
severity of the economic slowdown that had already gripped India.
"Even though all
segments and categories have shown contraction, the 20.6 per cent drop in
manufacturing output y-o-y is a highlight.
“The sectors like
automobile (-49.6 per cent), electrical equipment (-31 per cent), computer
hardware and optical equipment (-41.7 per cent) are clearly indicative of a
broader slowdown aggravated by the lockdown.
“It, therefore, didn't come
as a surprise that the capital goods segment contracted by a sharp 35.6 per
cent and consumer durables by 33.1 per cent," he said.
The figures, he said, are
expected to be "significantly worse" not only in the month of April
but for H1FY21.
Nish Bhatt, founder &
CEO of investment consulting firm Millwood Kane International, said a slump in
IIP was on expected lines as there was near-zero productivity in factories.
"Going forward, the
industrial activity will depend on how the government plans to lift the
national lockdown and bring economic activity back on track," he said.
"The fall in IIP is
likely to affect GDP data due later this month, a lot is hinging on government
announcing stimulus measures to prop up the economy."
Finance Minister Nirmala
Sitharaman has rolled out a Rs 1.7 lakh crore relief package comprising of free
foodgrain to poor and cash to poor senior citizens and women, in an attempt to
limit the economic damage caused by the pandemic and tackle loss of livelihood
of millions of poor hit by the unprecedented lockdown.
On inflation data,
Chowdhury said even though the data for April CPI is severely constrained,
given the limited exercise for data collection, overall inflation of 5.5 per
cent year-on-year was recorded in the month.
"Since core inflation
has become insignificant at this time, food inflation is the primary concern
recorded at 6.8 per cent," he said.
"Until lockdown is
lifted and logistics bottlenecks are addressed, the risks of higher food
inflation will remain, taking the overall CPI number well above the RBI
threshold of 4 per cent."
Bhatt said there was a
certain rise in food articles due to supply-side constraints.
According to the National
Statistical Office (NSO) data, manufacturing sector output fell 20.6 per cent
compared to a growth of 3.1 per cent in the same month a year ago.
Electricity generation
declined by 6.8 per cent as against a growth of 2.2 per cent in March 2019.
Mining sector output
remained flat compared to a growth of 0.8 per cent earlier.
The IIP in the last fiscal
contracted by 0.7 per cent from 3.8 per cent expansion in 2018-19.
The data for March showed
that production of capital goods, a barometer of investment, declined by 35.6
per cent as compared to a contraction of 9.1 per cent in the same month
previous year.
As per use-based
classification, primary good registered a contraction of 3.1 per cent,
intermediate goods 18.5 per cent (-) and infrastructure/ construction goods
23.8 per cent (-) in March 2020 over the same period the previous year.
The consumer durables
output fell 33.1 per cent, while non-durables production slipped 16.2 per cent
in March.
In terms of industries, 7
out of 23 industry groups in the manufacturing sector have shown positive
growth in March 2020.
Meanwhile, the retail
inflation for March has been revised marginally lower to 5.84 per cent compared
to 5.91 per cent estimated earlier, it added.
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Corporate