Lockdown woes: Mining shrinks 27%, manufacturing falls 64% in April

Electricity categorised as one of the essential services, tumbled 22.6 per cent on account of subdued demand from the industrial units.
The nationwide lockdown imposed to contain the spread of Covid pandemic had a telling effect on performance of key sectors during April. While mining and quarrying fell 27 per cent due to labour shortages, manufacturing recorded a sharp contraction of 64 per cent as most of the units were shuttered in the month.

All industries logged a dip in production in April. Industries such as vehicles, furniture, leather, tobacco, electrical equipment and fabricated metals recorded a contraction of more than 90 per cent during the month.

Electricity categorised as one of the essential services, tumbled 22.6 per cent on account of subdued demand from the industrial units.

Infrastructure and construction goods sector was also in the negative territory during April, decelerating by 83 per cent. The countrywide lockdown precluded the labourers from engaging in construction activities. At the same time, intermediate goods recorded negative growth of 66 per cent in April 2020.  The contraction in primary goods and consumer non-durables has been less severe at 26.6 per cent and 36.1 per cent respectively in April 2020.

“The fall in the growth of industrial production has been on account of broad-based contraction in both economy based classification and user-based classification of the IIP (Index of Industrial Production) with notable impact seen in case of manufacturing component in case of economy based classification. In case of the user-based classification, capital goods, construction goods and consumer durables were severely impacted. The growth in each of the sub-components has been the lowest since the start of the 2011-12 base year”, said a study by CARE Ratings.

Among user based industries, capital goods has recorded a notable and sharp contraction of more than 90 per cent in April 2020 which is reflective of subdued investment demand in the economy amidst the lockdown. Along with capital goods, consumer durables recorded a contraction of 95 per cent in April 2020, reflecting weakness in consumer demand induced by the lockdown. The nationwide lockdown and the consequent closure of a number of factories in this segment has weighed on both these segments.

According to the study, industrial activity would be subdued in the days ahead. “Also with the lockdown carrying on in a modified form in June, the Q1 FY21 performance will be negative in the range of 30 per cent. Recovering thereon will be a challenge given the issues with labour and supply chains. This will also get reflected in depressed performance of companies during this period”, it added.

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