You are here: Home » Economy & Policy » News
Business Standard

Industrial output shrinks by 4.3%, steepest decline in eight years

The data released on Monday shows that the Index of Industrial Production (IIP) fell by the highest margin since October 2011

Topics
IIP | Industrial growth | Manufacturing sector

Kanishka Gupta  |  New Delhi 

First, the numbers. The country's industrial output shrunk by a staggering 4.3 per cent for the second month on the trot in September, recording its worst performance since the present series was launched in April 2012. In fact the decline was the steepest in eight years, and was only surpassed by a bigger drop way back in October 2011.

What triggered such a huge fall?

Major loss in manufacturing output and a deepening slowdown in capital goods production, among other factors, are the key reasons behind the latest contraction, which was much higher than the 1.4 per cent fall in August.

In fact, the data released on Monday shows that the (IIP) fell by the highest margin since October 2011.

Beside this, mining output also fell by 8.4 per cent and electricity generation by 2.6 per cent in September.

September saw the manufacturing sector, which accounts for 78 per cent of the index, slow down to a much greater extent. That month, the sector's output contracted by 3.9 per cent, which was much higher than the 1.6 per cent contraction in August.

Of the 23 sub-sectors within manufacturing, 17 recorded year-on-year contractions, up from 15 in the previous month. The database showed that the contraction spread across all segments of the automobile sector, with motor vehicle production dipping by 25 per cent.

Auto components, commercial vehicles and two-wheelers were flagged by the government as sectors pulling the overall growth down.

However, machinery production was down 18.2 per cent and the production of electronic goods remained contractionary, declining by 10.6 per cent in September. This, even after the government gave boost to manufacturing in a sustained manner over the past one year, through a series of benefits and a phased manufacturing programme aimed at reducing electronic imports.

The capital goods segment contracted 20 per cent in September after a 21 per cent fall in August.

Production in the category remained muted for the eighth-straight month despite government efforts to open up even more sectors to easier foreign direct investment (FDI) flows earlier this year.

How have economists reacted to the crisis?

To know more, listen to this podcast...

MONTHLY STAR

Business Standard Digital

Business Standard Digital Monthly Subscription
149.00  
subscribe
Complete access to the premium product
Convenient - Pay as you go
Pay using Master/Visa Credit Card & ICICI VISA Debit Card
Auto renewed (subject to your card issuer's permission)
Cancel any time in the future
Requires personal information

What you get?

ON BUSINESS STANDARD DIGITAL

  • Unlimited access to all the content on any device through browser or app.
  • Exclusive content, features, opinions and comment – hand-picked by our editors, just for you.
  • Pick 5 of your favourite companies. Get a daily email with all the news updates on them.
  • Track the industry of your choice with a daily newsletter specific to that industry.
  • Stay on top of your investments. Track stock prices in your portfolio.
  • 18 years of archival data.

NOTE :

  • The product is a monthly auto renewal product.
  • Cancellation Policy: You can cancel any time in the future without assigning any reasons, but 48 hours prior to your card being charged for renewal. We do not offer any refunds.
  • To cancel, communicate from your registered email id and send the email with the cancellation request to assist@bsmail.in. Include your contact number for speedy action. Requests mailed to any other ID will not be acknowledged or actioned upon.

SMART MONTHLY

Business Standard Digital

Business Standard Digital - 12 Months
1499.00
subscribe
Get 12 months of Business Standard digital access
Single Seamless Sign-up to Business Standard Digital
Convenient - Once a year payment
Pay using an instrument of your choice - Credit/Debit Cards, Net Banking, Payment Wallets accepted
Exclusive Invite to select Business Standard events

What you get

ON BUSINESS STANDARD DIGITAL

  • Unlimited access to all content on any device through browser or app.
  • Exclusive content, features, opinions and comment - hand-picked by our editors, just for you.
  • Pick 5 of your favourite companies. Get a daily email with all the news updates on them.
  • Track the industry of your choice with a daily newsletter specific to that industry.
  • Stay on top of your investments. Track stock prices in your portfolio.

NOTE :

  • This product is a monthly auto renewal product.
  • Cancellation Policy: You can cancel any time in the future without assigning any reasons, but 48 hours prior to your card being charged for renewal. We do not offer any refunds.
  • To cancel, communicate from your registered email id and send the mail with the request to assist@bsmail.in. Include your contact number for easy reference. Requests mailed to any other ID will not be acknowledged or actioned upon.
First Published: Tue, November 12 2019. 13:58 IST
RECOMMENDED FOR YOU