India's manufacturing sector posted a slower growth of 0.2 percent in the third quarter (October-December) of FY22 (2021-22) as the third wave of the COVID-19 pandemic hit the country, according to the Gross Domestic Product (GDP) data released by the National Statistical Office (NSO) on 28 February.
Manufacturing gross value added (GVA) stood at Rs 5.91 lakh crore in the third quarter of FY22, lower than Rs. 6.24 lakh crore in the second quarter (July-September) of FY22. On an annual basis, GVA in Q3FY22 was just slightly above the Rs. 5.90 lakh crore GVA in Q3 FY21.
However, the latest quarterly data showed that the sectoral GVA still remained higher than pre-Covid levels of Rs 5.44 lakh crore in Q3 FY20 (October-December 2019). The Covid pandemic had begun in January 2020. The sector had grown by 5.5 percent in the second quarter (July-September) and 49 percent in the first quarter (April-June) of FY22.
On an annual basis, manufacturing is now expected to grow by 10.5 percent in FY22 to Rs. 24.83 lakh crore, according to the Second Advance Estimates of National Income, 2021-22 also released by the NSO on 28 February. This was a climbdown from the 12.4 percent growth estimated earlier, in the First Advance Estimates of National Income.
The sector had contracted 0.6 percent in FY21, as compared to a 2.4 percent fall during FY20.
A major factor that is taken into account while calculating GDP and GVA is the Index of Industrial Production (IIP), as the manufacturing sector constitutes 77.63 percent of the IIP. The country’s industrial output growth had slowed down sharply in December 2021, falling to just 0.4 percent.
Ups and down
India's manufacturing sector had been on a downward slide even before the pandemic hit. It was affected badly due to the nationwide lockdown imposed in 2020, and the slowdown in industrial demand in early 2021.
However, buoyed by a strong low base effect, the sector had seen massive growth in the first quarter of the current financial year. However, experts had warned this would not last. Subsequently, growth in the sector had moderated in the second quarter.After dipping by 36 percent in the first quarter of FY21, mainly due to a nationwide lockdown, manufacturing gross value added (GVA) came on the recovery track in the second quarter, contracting by only 1.5 percent. Subsequently, it grew by 1.7 percent in the third quarter and 6.9 percent in the fourth quarter.