Economic Survey: Overall IIP Growth Moderated

Industrial sector performance in terms of its contribution in Gross Value Added (GVA) improved in 2018-19 over 2017-18, the Economic Survey that was tabled in parliament today noted. However, as per the estimates of Gross Domestic Product by National Statistical Office (NSO), the real GVA of industrial sector grew by 1.6 per cent in first half (H1) (April-September) of 2019-20, as compared to 8.2 per cent in H1 of 2018-19. The low growth in industrial sector is primarily due to manufacturing sector which registered a negative growth of 0.2 per cent in 2019-20 H1.

Index of Industrial Production (IIP)

Overall, IIP growth has moderated to 3.8 per cent in 2018-19 compared to 4.4 per cent in 2017-18. During the current year 2019-20 (April-November), it grew at 0.6 per cent as compared to 5 percent in the corresponding period of previous year. The moderation in growth is mainly arising from subdued manufacturing activities due to slower credit flow to Medium and Small industries, reduced lending by NBFCs owing to liquidity crunch, tapering of domestic demand for key sectors such as automotive sector, pharmaceuticals, and machinery and equipment, volatility in international crude oil prices, prevailing trade related uncertainties. Exports of key labour intensive sectors, such as gems and jewellery, basic metals, leather products and textile products under performed during the current financial year. The growth of capital goods and consumer durables declined by 11.6 per cent and 6.5 per cent respectively during the current financial year 2019-20 (April-November). Consumer durables segment was hit mainly due to lack of demand from the household sector especially in Automobile industry.

The growth of infrastructure/construction goods declined by 2.7 per cent in the current financial year 2019-20 (April-November). Intermediate goods and consumer non-durable registered positive growth in November 2019, however, primary goods, capital goods, infrastructure/construction goods and consumer durables reported negative growth in November 2019.