IIP contraction rate slows in May, govt withholds headline figure

NEW DELHI: The pace of contraction of India’s factory output slowed in May, falling 34.7% on year from 57.6% contraction in April, calculations based on data released by the government on Friday showed. The government did not provide a number for the change in output from May 2020 but said the number of units responding has improved as compared to the earlier months of lockdown. The Ministry of Statistics & Programme Implementation also revised the contraction in April from 55.5% earlier.

“In view of the preventive measures and announcement of nation-wide lockdown by the Government to contain spread of Covid-19 pandemic, majority of the industrial sector establishments were not operating from the end of March, 2020 onwards,” MoSPI said in a statement, adding that this has had an impact on the items being produced by the establishments during the period of lockdown and the subsequent periods of conditional relaxations in restrictions.

Manufacturing, mining and electricity contracted by 39.3%, 21% and 15.4%, respectively in May.

“Quite clearly the lockdown and limited opening up affected production of all industries. Different state rules on transport and labour further exacerbated the situation. While non-essential goods were permitted for production challenges remained in logistics and labour,” said Madan Sabnavis, chief economist at CARE Ratings, adding that a similar trend may be expected in June too.