Subdued manufacturing activities lowered IIP, says Economic Survey 2019-20
New Delhi/IBNS: The moderation in the Index of Industrial Production (IIP) to 3.8 per cent in 2018-19 compared to 4.4 per cent in 2017-18 has been due to subdued manufacturing activities caused by slower credit flow to Medium and Small industries, reduced lending by NBFCs owing to liquidity crunch, tapering of domestic demand for key sectors such as automotive sector, pharmaceuticals, and machinery and equipment, volatility in international crude oil prices, prevailing trade-related uncertainties, noted the Economic Survey 2019-20.
During the current year 2019-20 (April-November), it grew at 0.6 per cent as compared to 5 per cent in the corresponding period of the previous year.
Exports of key labour-intensive sectors, such as gems and jewellery, basic metals, leather products and textile products under performed during the current financial year, the Survey said.
The growth of capital goods and consumer durables declined by 11.6 per cent and 6.5 per cent respectively during the current financial year 2019-20 (April-November).
Consumer durables segment was hit mainly due to lack of demand from the household sector, especially in Automobile industry.
The growth of infrastructure/construction goods declined by 2.7 per cent in the current financial year 2019-20 (April-November).
Intermediate goods and consumer non-durable registered positive growth in November 2019, however, primary goods, capital goods, infrastructure/construction goods and consumer durables reported negative growth in November 2019.
On the other hand, Gross Capital Formation (GCF) in industry has registered a rise from (-) 0.7 per cent in 2016-17 to 7.6 per cent in 2017-18 showing upward momentum of investment in industry.
Mining and quarrying, manufacturing, electricity, gas, water supply and other utility services and construction had registered a growth rate of 7.1 per cent, 8.0 per cent, 6.1 per cent and 8.4 per cent respectively in 2017-18.
Credit flow to industries like food processing, chemicals and chemical products, vehicles, vehicles parts and transport equipment registered lower growth in September 2019 as compared to September 2018.
Growth in gross bank credit flow to the industrial sector, on a year on year basis, rose to 2.7 per cent in September 2019 as compared to 2.3 per cent in September 2018.
Credit flow industries like wood and wood products, all engineering, cement and cement products, construction and infrastructure increased in September 2019 as compared to September 2018.
Credit flow to industries like food processing, chemicals and chemical products, vehicles, vehicles parts and transport equipment registered lower growth in September 2019 as compared to September 2018.
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