Index of Industrial Production (IIP) Data, December 2020: All You Need To Know
The industrial production, or the factory output, is gauged by the Index of Industrial Production (IIP) that takes into consideration, the activity recorded in sectors such as mining, manufacturing, and electricity. Industrial production contracted by 1.9 per cent in November 2020 (Also Read: Industrial Production Contracts 1.9% In November 2020 )
According to a statement released by the government, the indices of industrial production for the mining, manufacturing, and electricity sectors for the month of December 2020 stand at 115.1, 137.5, and 158.0 respectively.
According to use-based classification, the indices stand at 129.2 for primary goods, 94.3 for capital goods, 147.5 for intermediate goods, and 147.7 for infrastructure or construction goods for the month of December 2020. The indices for consumer durables and consumer non-durables stand at 123.0 and 161.2 respectively for the month.
Meanwhile, the country's output of eight core sectors — also known as infrastructural output, contracted by 1.3 per cent in December amid a decline in the output of crude oil, natural gas, refinery products, fertiliser, steel, as well as cement sectors. The production of core sectors grew by 3.1 per cent in the corresponding month of 2019. (Also Read: Industrial Production Contracts 1.9% In November 2020 )
The country's industrial activity exceeded consensus expectations, rising one per cent year-on-year in December. Economic activity levels are improving gradually, with most indicators posting modest gains on a quarterly basis, as per a research report by Barclays. According to RBI, the capacity utilisation has improved, and consumer confidence is reviving.
''The IIP gives some broad indications of a rebound in economic activity with the reading for Dec 20 at one per cent as against - 2.10 per cent for Nov 20. What is significant is the pickup in both consumer durables and non- durables as also infra goods. While the general direction be of improvement in the reading, it may be too early to make any inference based on IIP numbers of a month or two,'' said Dr. Joseph Thomas, Head of Research - Emkay Wealth Management.
Considering infrastructure output, apart from coal and electricity, all the other sectors recorded negative growth in December 2020. Apart from coal and electricity, all the other sectors recorded negative growth in December 2020.
During the April-December period in 2020, the output of the sectors slipped by 10.1 per cent, compared to a growth rate of 0.6 per cent in the year-ago period. The eight core industries constitute 40.27 per cent of the index of industrial production.
Reserve Bank of India Governor Shaktikanta Das-led Monetary Policy Committee (MPC) voted unanimously to keep the policy rate unchanged at four per cent, while announcing its policy decision. The RBI expects the gross domestic product (GDP) growth to be at 10.5 per cent in the next fiscal year.
The retail inflation last month was registered at 4.06 per cent, down from 4.59 per cent in December 2020. ''The industrial production data at one per cent is indicative of the manufacturing activity picking up post lockdown. It will reflect on the GDP data which will be released later this month,'' said Mr. Nish Bhatt, Founder and CEO, Millwood Kane International.