Page 638 - ES 2020-21_Volume-1-2 [28-01-21]

Industry and Infrastructure 265

TRENDS IN INDUSTRIAL SECTOR

Index of Eight-Core Industries and Index of Industrial Production (IIP)

8.4 On 24 March 2020, when the 21-day national lockdown was imposed to prevent the
proliferation of COVID-19, it was expected that the economic activities would freeze except
for some essential services. The IIP growth started contracting immediately after the lockdown
reaching its historical low in April-2020. The calibrated and gradual unlocking process led to
the resumption of economic activities translating into positive growth in IIP for the first time in
September-2020 since the lockdown. The subsequent months have seen consistent improvement
and the sub-components of the IIP have gradually inched towards their pre-COVID levels, a
reflection of the beginning of the revival of the economy. The improvement has been broad-based
in both the core and non-core components of the IIP with a few exceptions like the petroleum
products in the core group that are still below the normal level.

8.5 The eight-core industries that support infrastructure, such as coal, crude oil, natural gas,
refinery products, fertilizers, steel, cement, and electricity have a total weight of nearly 40
percent in the IIP. The eight-core index recorded its all-time low growth of (-) 37.9 due to
COVID-19 led nation-wide lockdown (April-2020). The fall in growth and index was expected
as was the recovery of the index too. The eight-core industries registered (-) 2.6 per cent
growth in November-2020 as compared to 0.7 per cent in November-2019 and (-) 0.9 per cent
in October-2020 (Figure 2). The cumulative growth of core industries during April-November
2020 was (-) 11.4 per cent as compared to 0.3 per cent during April-November 2019.

8.6 Tracking the level of the index apart from the YoY growth enables us to understand the
revival of economic activity better. The trajectory of the eight-core index has been improving
since May-2020 and further recovery/expansion is expected in remaining months of FY21. The
current level (November-2020) of the seasonally adjusted eight-core index is 6 per cent lower
than the pre-lockdown levels in February-2020 (Figure 3). The highlights of the performance of
eight-core industries in FY21 are presented in Table 2 and the trajectory of the respective index
is in Figure 4. All the sub-components of the eight-core index are inching up to the pre-COVID
levels (Figure 5).

Figure 2: IIP and Eight Core growth from Jan-19 to Nov-20 (Per cent)

10.0
0.0

-10.0
-20.0
-30.0
Eight Core IIP
-40.0

-50.0
-60.0
Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20

Source: Survey calculations based on MoSPI and Office of Economic Adviser’s data.