India Key Industries’ Output Contracts in May on Virus Impact
A luxury residential project stands under construction in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

India Key Industries’ Output Contracts in May on Virus Impact

India’s infrastructure industries’ output contracted for a third straight month as the economy continued to feel the pain of measures to contain the coronavirus pandemic.

The index of eight core infrastructure industries, which comprises output of coal, crude oil, cement and electricity among others, declined 23.4% in May from a year ago, the government said in a statement Tuesday. The gauge makes up 40% of India’s factory output.

Key Insights

  • A contraction in output of coal, crude oil, natural gas, steel, cement and electricity weighed on the overall index, while only production of fertilizers rose
  • While the reading is an improvement from the record fall of 38.1% in April, it underlines the lingering effects of a lockdown India imposed since March 25 to check the virus’s spread. While the curbs have been relaxed gradually beginning April 20, many factories and businesses are yet to return to full capacity amid a shortage of workers
  • Consumers, the backbone of India’s economic growth in the past, have largely held back spending
  • The result: Asia’s third-largest economy is set to record its first contraction in more than four decades this year

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  • Sectors that recorded contraction:
    • Coal -14% y/y; crude oil -7.1%; natural gas -16.8%; petroleum refinery products -21.3%; steel -48.4%; cement -22.2%; electricity output -15.6% y/y
  • Fertilizer rose 7.5% y/y
  • To read the full statement, click here

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