JUNE IIP – CONTRACTION BUT GETTING BETTER

about 2 months ago
No image

 

IIP for June’20 came in at -16.6% though analysts say that it is better than the -20 to -22% most had expected. This is like saying a flood is better than a famine – both anyway indicate devastation.

IIP (-) 16.6% v/s (-)33.9%

Manufacturing (-)17% v/s (-)39%

Electricity (-)10% v/s (-)15.4%

Mining (-)20% v/s (-) 21%

Primary Goods (-) 14.6% v/s (-)20%

Intermediate (-)25.1% v/s (-) 44.1%

Consumer non-durable 14% v/s (-)11.68%

Consumer durables (-)35.5% v/s (-)68.46%

Capital Goods (-)36.9% v/s (-)64.3%

Infrastructure (-) 21.3% v/s (-) 42%

Yes, on a MoM, these numbers for June, even though a contraction look much better – indicates improvement. This was bound to happen as gradual unlocking began in June, more factories and offices were opened up in June. The only sector which has shown a positive is Consumer non-durables and that could be mainly due to pent-up demand, rural demand for FMCGs and re-stocking. This could be a one-time thing.

July IIP will also come in negative but once again, it will be much better than June and manufacturing will only get better; so the bottomline is that contraction or negative growth is here to stay for a couple of months more.

The consensus among various analysts is that GDP for Q1 will come in the range of (-)20% to (-)25%.

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

No comment posted for this article.