IIP for January contracts 1.6%, slips back into negative zone

The Index of Industrial Production (IIP) for January slipped back into the negative territory and contracted at 1.6 per cent after growing 1 per cent in December on the back of positive manufacturing numbers.

The data points to recovery still being patchy and the rising covid cases could cast a shadow over the momentum in coming months.

Manufacturing, which has 77% weightage in IIP, had been under severe stress owing to curtailed economic activity in most of 2020 due to which the index showed a decline of more than 13 per cent from April to December year-on-year.


The December IIP figure of 135.9 was higher than pre-Covid February 2020 figure of 134.2 showing that the economy is in the recovery mode.

However, many of the subsectors withing the broader manufacturing category are still showing patchy recovery.

The recovery process which gained momentum recently could face some resistance from the rising coronavirus cases in the country. States like Maharashtra have hinted that lockdowns could be imposed in some parts where cases have shown a spike.

Core sector, which forms 40.27% of the IIP, grew at 0.1% in January. The second advance estimates have pegged economic contraction at 8 per cent in the current fiscal. Economic growth is expected to bounce back sharply in the next fiscal on the back of resurgence in economic activity as well as low base effect.