Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

India’s industrial production shrinks 1.1% in August


From UPSC perspective, the following things are important :

Prelims level : IIP

Mains level : Economic Slowdown


India’s Index of Industrial Production (IIP) slid 1.1% in August 2019 amid worrying signs of an economy. This pulled down the overall growth of the index to 2.4%.

Signs of a problem

  • Passenger vehicle sales in the country dropped 24% in September — the 11th month of decline in a row. Car sales are taken to be the benchmark for a market economy’s health.
  • The index for electricity production also slipped by 0.9%. Power output is generally tied to its demand, which signifies economic activity. 
  • The mining index grew only 0.1%.

Agriculture worries

  • Agriculture has been lackluster for quite some time exacerbated by a series of droughts. The monsoon this year was delayed and erratic and there are complaints of droughts in many states.

Manufacturing worries

  • 15 out of 23 industries in the manufacturing sector shrank in August.
  • Manufacture of motor vehicles, trailers and semi-trailers tanked the fell the most – 23%. 
  • Machinery and equipment shrank 21.7% while ‘other manufacturing’ slipped 18%. 
  • Growth was seen in mostly less value-adding industries such as basic metal manufacturing. 
  • Capital goods shrank 21% while infrastructure and construction goods fell 4.5%. 

The government tried to solve

  • The government has cut corporate taxes to boost consumer demand and spending.
  • RBI has been reducing lending rates to increase the availability of funds.


In this situation, shrinking manufacturing can increase job losses and signify that consumer demand remains muted.



A measure of manufacturing

Notify of
Inline Feedbacks
View all comments