V-shaped recovery continues, IIP and core sectors at pre-Covid levels: CEA

NEW DELHI: The V-shaped recovery of economic activity continued in October as the index of industrial production (IIP) and eight core sectors inched up to pre-Covid levels, chief economic adviser K V Subramanian said on Saturday. The CEA’s comments came a day after official data showed the country’s industrial output growth rose for the second successive month to an eight-month high in October bolstered by some festive demand and led by a turnaround in manufacturing, electricity and consumer durable sectors.
“Growth in IIP and eight core industries is on the back of broad-based growth in all the sectors. The consumer and investment goods were the main drivers of IIP growth in Oct-2020,” Subramanian said in a series of tweets.
He said there was across the board recovery as 243 out of 407 items in IIP basket grew in October this year. In contrast, 217 items grew on average in pre-Covid period (Apr 2012 to Feb 2020). The similar numbers for September-20 and April-20 were 196 and 28, respectively. “From 107 items in the IIP recording a growth more than 10% in January 2020 to 170 items that recorded a growth of more than 10% in October 2020 foretells a strong and robust recovery,” Subramanian said while analysing the IIP data for October which was released by the National Statistical Office on Friday.
He said that of the 407 items in the IIP basket, 276 recorded better growth in October 2020 as compared to the growth in September. Several economic indicators have shown a sharp recovery after the easing of the strictest lockdown. The September quarter GDP contraction narrowed to 7.5% from a record 23.9% decline in the June quarter. Several economists, investment banks now estimate the economy to post a narrower contraction compared to their previous estimates. The Reserve Bank of India (RBI) expects the economy to contract 7.5%, shallower than the previously estimated 9.5% contraction and has forecast growth to return to positive territory in the third and fourth quarters of the current fiscal year that ends in March.
Some economists have urged caution over Friday’s IIP numbers saying they would wait for a few more data points to signal a broadbased tur naround.

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