Sunday , September 20 2020

Industrial production has seen the highest contraction in almost eight years India news


NEW DELHI: The country's factory output has dropped to its lowest level for nearly eight years, affected by sharp contractions in capital products, manufacturing, mining and the electricity sector and stepping up new pressure on authorities to return the slowdown.
Data released by the National Statistical Office (NSO) on Monday showed that the index of industrial production contracted 4.3% in September, the second consecutive month of decline after a 1.4% drop in August and lower than the expansion. from 4.6% published in the previous year period. Between April and September, the sector grew by 1.3% annually compared to 5.2% expansion in the previous period.
This is the lowest monthly increase in the 2011-12 series, after falling 1.7% in November 2012. In the 2004-05 series, which cannot be compared to the 2011-12 series, due to methodological changes, this was the sharpest drop in contraction of 5% in October 2011.
The indication of a sharp slowdown was evident when the eight core sectors contributing nearly 40% of the industrial production index fell to their eight-year low in September.
The eight core sectors that include coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity declined by 5.2% in September, the sharpest decline in the 2011-12 series.
In terms of industry, 17 of the 23 industry groups in the manufacturing sector were contracted in September, compared to the corresponding month of the previous year. The industrial group "production of motor vehicles, trailers and semi-trailers" showed the highest decline of (-) 24.8% followed by (-) 23.6% in "furniture production" and (-) 22% in "production of fabricated metal products other than machinery and equipment. "
"Industrial performance in September 2019 stood out as the worst YoY performance in the current series. In addition, the leading indicators point to continued weakness in October 2019, combined with an unfavorable underlying effect, may result in further deterioration in the just concluded month, "said Aditi Najar, chief economist at the IFRA rating agency.
The manufacturing sector declined 3.9% during the month in relation to the expansion of 4.8%, while the mining sector decreased by 8.5% in September compared to the expansion of 0.1%.
The capital goods sector, which is a key gauge of industrial activity, fell by 20.7% in September compared to 6.9% in September 2018. The consumer durables segment contracted with 9.9% during the month compared to 5.4% in the previous year.
The sharp rise in the economy has prompted the government to unveil a series of measures to revive growth, and experts say the impact of the steps will be felt in the coming months. Several economists have said that anemic numbers will affect overall economic growth and the Reserve Bank of India will lower interest rates to accelerate expansion.
"We believe the monetary authorities will continue to follow the adjustable monetary policy and expect further rate cuts in December monetary policy," said Devendra Kumar Pant, chief economist at India Rating and Research, which is part of the Fitch group.

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