April manufacturing IIP to contract by 50-60 per cent: Report
"We believe IIP manufacturing and IIP in April will contract by 50% -60% with some improvement in May in the range of -30% to -35%" said the SBI report released on Wednesday. Official release of IIP numbers for April are scheduled to be released in the second week of June.
by Gayatri Nayak
MUMBAI: The country wide lockdown since March is expected result in contraction of India's manufacturing output index by at least 50 to 60 per cent in April and also at least one quarter of GDP is expected to be wiped out according to a research report by State Bank of India. But is expected to moderate in May.
"We believe IIP manufacturing and IIP in April will contract by 50% -60% with some improvement in May in the range of -30% to -35%" said the SBI report released on Wednesday. Official release of IIP numbers for April are scheduled to be released in the second week of June.
The estimates are based on SBI composite index for May. "The yearly SBI Composite Index for May has increased marginally to 41.0 implying a large declines, compared to 40.0 in Apr’20" said, S K Ghosh, group chief economist, SBI. The SBI Composite Index is a leading indicator for manufacturing activities in the Indian economy aims to foresee the periods of contraction and expansion
COVID related lockdown could now wipe out one quarter growth or GDP . With FY'20 real GDP at Rs 147 lakh crores, one quarter GDP loss is estimated at Rs 37 lakh crores assuming the lockdown extension into June, according to the report.
The ongoing efforts to control COVID-19 pandemic led to sharp declines in output and employment across the world economies for a third successive month in May but the rate of decline is easing, it said.
"We believe with COVID peak likely in the last week of June. There is a large likelihood of a even larger loss that we have factored in" the report said.