New Delhi: India’s industrial output dropped steeply in May 2020, in what is the latest sign of the severe economic impact of the lockdown imposed to stop the spread of the novel coronavirus.According to government data released on Friday evening, the Index of Industrial Production (IIP) contracted by nearly 35% for May, when compared to the same month a year ago.While the figures show that the COVID-19-induced lockdown had a significant impact on factory production, the May numbers are better than the 57.6% contraction reported for April 2020.Also read: Covid Lockdown: India’s Factory Output Sees Steep Drop in AprilLike last month, the Centre has not provided the year-on-year change in IIP data and instead only released the index numbers — the change in industrial output therefore has been calculated by The Wire. The government has also stated that as with April’s data, “it may not be appropriate to compare the IIP for May 2020 with those of months preceding the COVID 2019 pandemic”.“In view of the preventive measures and announcement of nation-wide lockdown by the Government to contain spread of COVID-19 pandemic, majority of the industrial sector establishments were not operating from the end of March, 2020 onwards. This has had an impact on the items being produced by the establishments during the period of lockdown and the subsequent periods of conditional relaxations in restrictions,” a statement from the National Statistical Office noted.“The Index for the month of May 2020 stands at 88.4 as compared to 53.6 for April 2020, indicating a graded pickup in industrial activity in the economy,” the statement added. According to the NSO’s data, during May, manufacturing contracted by 39.3%, compared to a much sharper fall of 67.1% in April. Mining and electricity contracted by 21% and 15.4% respectively in May.Also read: India’s Factory Output Contracted by 16.7% in March 2020A number of economic indicators have showed that industrial activity picked up in India from May onwards, as some lockdown restrictions eased. For instance, both manufacturing and services Purchasing Manager’s Index (PMI) showed significant improvement in June when compared to May – although they still remain in a contraction zone. The International Monetary Fund (IMF) in June said that India’s economy would shrink 4.5% in FY’21, in what was a reversal of its previous forecast of 1.9% growth for the fiscal year. In its latest estimate, the organisation cited a larger-than-anticipated disruption to domestic activity as a result of a more severe nationwide lockdown.After IMF released its first world economic outlook in April, the pandemic rapidly intensified in many countries, including India, necessitating stringent lockdown measures for a prolonged period, thus resulting in even larger disruptions to activity and massive job losses than forecast.While India lifted many of its restrictions on industrial activity and consumer mobility, in a bid to help restart the economy, a number of Indian cities have started imposing fresh lockdown measures to slow the escalating COVID-19 cases.
