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Current Affairs

India’s factory output slips to 10-month low

Date: 16 February 2022 Tags: Reports & Indices

Issue

Industrial output fell to a 10-month low of 0.4 per cent in December, based on data released by the National Statistical Office (NSO).

 

Details

  • The main reasons for the fall have been attributed to low manufacturing, capital goods and consumer durables output along with an unfavourable base.

  • Overall, the Index of Industrial Production (IIP) was higher than pre-pandemic levels seen in December 2019.

  • However, the impact of restrictions due to the Omicron variant of the Covid-19 pandemic may get reflected in the industrial output data next month.

 

Reasons for drop

  • The major reason for the drop was the 0.1 per cent contraction in manufacturing output, which carries 77.6 per cent of the weight of the IIP.

  • In previous month, manufacturing output had grown by 0.8 per cent. It had witnessed a climb of 2.7 per cent a year ago.

  • Low consumption and investment had also a major effect. Capital goods fell by 4.6 per cent in December as against a contraction of 2.0 per cent a month ago. Capital goods indicate investment.

  • Consumer durables output contracted 2.7 per cent in December. Consumer non-durables output contracted 0.6 per cent.

 

Growing numbers

Mining output grew 2.6 per cent in December. Electricity output recorded a growth of 2.8 per cent in December.

 

Index of Industrial Production

The Index of Industrial Production (IIP) is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products produced during a time period with respect to a chosen base period.

 

Constituents

  • Coal:  Weightage is 10.33%

  • Crude:  Weightage is 8.98%

  • Natural gas: Weightage is 6.88%

  • Refinery products: Weightage is 28.04%

  • Steel: Weightage is 17.92%

  • Cement: Weightage is 5.37%

  • Fertilizers: Weightage is 2.63%

  • Electricity: Weightage is 19.85%