Industrial growth shrinks to 4-month low of 2.4%, fails to meet estimates

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India's industrial growth, as per the Index of Industrial Production (IIP), slowed further in July to 2.4 percent from 12.7 percent in June, data released by the Ministry of Statistics and Programme Implementation on September 12 showed.

At 2.4 percent, the July industrial growth figure is the lowest in four months.

The July industrial growth figure was well below the consensus estimate. A Moneycontrol poll of 17 economists had predicted IIP growth would slow to 4.1 percent.

IIP growth has been slowing ever since it hit a one-year high of 19.6 percent in May on the back of a favourable base effect.

The base effect turned sharply favourable in May due to the second wave of the coronavirus pandemic engulfing the country in the year-ago period, which saw the reimposition of restrictions on movement and activity in several parts of the country. This hit industrial activity and created a low base for this year's IIP growth figures.

But with activity levels improving rapidly last year, the favourable base has waned.

The story was near-identical when looking at use-based classification, with five of the six types of goods witnessing a sharp drop in output growth, The sixth, consumer non-durable goods, saw its production fall by 2 percent in July when compared to the year-ago period.