After India reported negative growth in GDP, here comes another jolt for the economy which is grappling with the Covid-19 pandemic and its effects. The nation, on Friday, has reported a sharp decline of 10.4 percent in the industrial output for the year-on-year (YoY) in July 2020. Notably, the industrial output has followed a downward revise of 15.8 percent fall in June and compared to forecasts of an 11.5 percent drop.
However, this is the fifth consecutive month of the plunge in the figure due to the coronavirus induced lockdown.
Among the three key sectors, manufacturing, mining, and electricity contracted 11.1%, 13%, and 2.5%, respectively, in July from a year ago.
According to the rating agency ICRA, while the improvement in the industry had gathered speed in July 2020, the momentum of the recovery in the services sector hampered that month.
Besides this GST e-way bills, rail freight, port cargo traffic, domestic airlines' passenger traffic, and the consumption of petrol and ATF, are among the other indicators which reported only a slight improvement in their YoY performance in July 2020, in comparison to June 2020.
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On the other hand, the YoY performance of diesel consumption, hydroelectricity generation, and refinery output had worsened in that month, as the nation is witnessing a continuous spike in the number of infections causing the re-imposition of lockdowns in some states.
As per the agency, government expenditure, a key driver of economic activity in Q1FY21, reported a volatile trend in July 2020.
It pointed out that revenue expenditure growth slipped from 40.1 percent in June 2020 to 18.6 percent in July 2020, while remaining substantial.
However, capital expenditure contracted by 47.1 percent in July 2020 after having more than doubled in June 2020.