Industrial Production Declines 3.6% In February
Construction workers prepare steel rebar rods for reinforcing concrete, on an overpass construction site (Photographer: Sanjit Das/Bloomberg)

Industrial Production Declines 3.6% In February

India’s industrial production declined in February over a year ago as output in the mining and manufacturing sectors fell.

The Index of Industrial Production fell by 3.6% in February compared to a decline of 0.9% in January 2021, according to revised estimates. A Bloomberg poll had forecast a drop of 3% in industrial output in February.

Sectoral Estimates

  • Mining output fell 5.5% in February compared to a contraction of 2.4% in January.
  • Manufacturing output fell 3.7% compared to a drop of 1.3% a month prior.
  • Electricity generation rose by 0.1% compared to a rise of 5.5% in January.

Industrial output, as classified by the end-use of goods, indicated a contraction in three sectors.

  • Primary goods output declined 5.1% in February compared to a rise of 0.7% in January 2021.
  • Capital goods output fell 4.2% versus a contraction of 9.6% in the previous month.
  • Intermediate goods output fell 5.6% versus a 0.8% increase a month ago.
  • Infrastructure and construction goods output fell 4.6% compared to a rise of 1.8% in January.
  • Consumer durables output rose 6.3% versus a fall of 0.2% a month before.
  • Consumer non-durables output fell 3.8% compared to a fall of 5.4% in January.

Performance across use-based categories is “discouraging” as five out of six segments, excluding consumer durables, saw a contraction, said Devendra Kumar Pant, chief economist at India Ratings & Research.

The data trend of past few months therefore reinforces the view that the uptick witnessed in the month of September 2020 and October 2020 was more due to a combination of festive and pent demand and we are still far from witnessing a sustained recovery.  Growth pattern of primary and intermediate goods, two leading indicators of industrial production, are pointing towards a lacklustre industrial performance in short- to medium-run. 
Devendra Kumar Pant, Chief Economist, India Ratings & Research.
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