Industrial output contracts 0.1% in March 2019Date: 11 May 2019 Tags: Basics of Economics, Industries
Factory output, as measured in terms of Index of Industrial Production (IIP) contracted by-0.1% in March 2019. It is lowest in 21 months, mainly due to slow down in manufacturing sector due to contraction in consumption, as well as investment. IIP’s previous low was recorded in June 2017, when output shrank by 0.3%.
In February 2019, IIP was almost flat, growing at 0.1%. It had expanded 5.3% in March 2018. During entire 2018-19 fiscal, it had witnessed 3.6 % growth as against 4.4% in the previous fiscal.
Breakaway of IIP in March 2019
- Manufacturing sector: Constituting 77.63% of IIP, contracted by 0.4% in March 2019 as compared to 5.7% expansion in the year-ago month.
- Capital goods output: It declined by 8.7% as against 3.1% contraction in March 2018.
- Power sector growth: It slowed to 2.2% in March 2019 as compared to 5.9% a year ago.
- Mining sector growth: It also dropped to 0.8% in March 2019 compared to 3.1% expansion a year ago.
- Use-based classification growth rates in March 2019: 2.5% in primary goods, (-) 2.5% in intermediate goods and 6.4% in infrastructure/ construction goods. Similarly, consumer durables and consumer non-durables have recorded growth of (-) 5.1% and 0.3% respectively.
Index of Industrial Production (IIP)
- It is composite indicator that measures short-term changes in volume of production of basket of industrial products during given period with respect to chosen base period.
- It is released on monthly basis by Central Statistical Organization (CSO), Ministry of Statistics and Programme Implementation (MoSPI). Base year is 2011-12.
- It comprises 407 individual items and sector wise, these items fall into three categories-Manufacturing (405 items), Mining (1 items) & Electricity (1 item).
- The separate weightages of the three sectors are 77.63%, 14.37%, 7.9% respectively. In IIP, combined weightages of eight core Industries is 40.27%.
- In use wise composition, these 407 individual items are divided into capital goods, basic goods, intermediate goods and consumer goods.
- Further, consumer goods are divided into consumer durables and consumer non-durables. In it, maximum weight is of basic goods, followed by Consumer Goods, followed by Intermediate and Capital Goods.