How has the IIP number for August 2020? Has there been some improvement in the IIP numbers?

For the month of July 2020, the index of Industrial Production or IIP contracted by -10.4%. IIP numbers are normally reported with a lag of one month. This is the fifth month in succession that IIP growth is negative and the eighth time in the last 12 months.

However, the improvement to -10.4% suggests that economic activity was gaining pace after lockdown restrictions had started to be lifted. In addition, the revised estimates for Jun-20 IIP have been upgraded from -16.6% to -15.78%.

In terms of the specific sub-groups, the manufacturing sector with 77.6% weightage has registered a -11.1% contraction in Jul-20. Mining output fell by -13% on a YOY basis while electricity was just about lower by 2.5%. Broadly, output is getting back to normal levels.

The IIP de-growth touched a low of -55.5% in May 2020 but has been consistently improving from that point. However, going ahead, the real challenges could come from labour issues, supply chain challenges and the rapid spread of the virus in rural areas.