India's factory output contracts for 4th straight month in June

Source: Xinhua| 2020-08-11 23:37:14|Editor: huaxia

MUMBAI, Aug. 11 (Xinhua) -- India's June factory output contracted by 16.6 percent from the same month a year ago compared to 34 percent contraction in the preceding month of May on year, according to the data released by the National Statistical Office (NSO) on Tuesday.

This is the fourth consecutive month of contraction of Index of Industrial Production (IIP) from the same month a year ago, even as COVID-19 led lockdown was partially lifted in several pockets of the country.

"It may not be appropriate to compare the IIP in the post-pandemic months with the IIP for months preceding the COVID-19 pandemic," NSO said in its statement.

However, on sequentially monthly basis, the IIP for June stands improved at 107.8 as compared to 53.6 and 89.5 for April and May, the statement said.

"The sharp turnaround in consumer non-durables to a double-digit expansion in June 2020 is likely to have been driven by the rebuilding of inventories that were depleted during the lockdown months, and may not sustain at such high levels after the restocking is completed," said Aditi Nayar, Principal Economist, ICRA a domestic credit rating agency.

Commenting on the outlook ahead, Nayar said, "The pace of contraction of various lead indicators, such as the output of Coal India Limited, electricity consumption and GST e-way bills narrowed to single-digits in July 2020, which suggests that the de-growth in the IIP would also shrink in that month."

Nayar also continued to express caution that pent-up demand contributed to the improved performance of certain categories of manufacturing in June-July 2020, which may not sustain in August 2020 considering the lockdown extended in several states. Enditem