What to make of industrial output contraction


The Index of Industrial Production (IIP) again threw a surprise in November, contracting by 1.9 percent after two months of growth. The IIP data has reflected Covid-19 slowdown. It fell by as much as 57.6 percent in April, and was negative from March to August, before showing growth in September and October. Analysts say the November output is a blip. In many ways, it was expected because output in the previous two months reflected festive pent-up demand. Does that mean the recovery is shallow? No. Lead indicators such as electricity demand, exports, ports cargo traffic and GST e-way bill generation portend a rebound in December 2020, per economists.

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