IIP MAY – ITS CONTRACTION ALL AROUND

about 4 years ago
No image

 

As Covid cases spike across India, the IIP number for May 2020 does not come as a shock. At -34.7 v/s -57.6% we can only say that the contraction is a bit better, there is slight improvement as the lockdown was lifted in May.

The number of units responding has improved in May 2020 as compared to the earlier months of lockdown. The weighted response rate at time of QE of April 2020 was 87%  which is now revised upwards to 91% at first revision.

It makes no sense to compare the numbers either monthly or yearly as its an evolving situation; its contraction all around.

Mining – (-)20.98%

Manufacturing – (-)39.32

Electricity – (-)15.43

Primary goods – (-)20.01

Capital goods – (-)64.29

Intermediate goods – (-)44.09

Construction/infra goods – (-)42

Consumer durables – (-)68.46

Consumer non-durables – (-)11.68.

As we can see, it is contraction all along and to be expected too. June numbers might turn out better as almost all across the country some form of economic activity had begun.

But what does not look good is that a lockdown has been re-imposed in Pune, Pimpri-Chinchwad and it is being extended in Thane. Maharashtra which is seeing a phenomenal spike in cases is bound to see more parts of the state extend a lockdown.

This will be the new normal till we get a cure. The industries will work for some days and go back into a shutdown mode again. Thus when companies plan their targets and business plan, this open and shut will necessarily have to be factored in.

Thus we might see some improvement in the June numbers but the current spike up and lockdowns will derail the recovery process.

What we are seeing in these IIP numbers is the ground reality and not the runaway indices of the stock exchange or headline making news like Mukesh Ambani is richer than Warren Buffett.

Whether we like it or not, this pandemic is wreaking havoc all across and like humans who live to tell this tale, it will be survival of the fittest for companies too.

Popular Comments