As expected, the lockdown wreaked havoc on the output of eight core industries in April, contracting 38.1 per cent for the month under review.

The eight core industries — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — had contracted 9 per cent in March. In April last year, their output had recorded 5.2 per cent growth. Output of all core industries contracted in April, although there was a differential impact on the extent to which activity was curtailed in the various constituents.

While steel (contraction of 83.9 per cent) and cement (contraction of 86 per cent) were hit the most, fertilisers and crude oil production were affected to a lesser extent; they reported modest contraction of 4.5 per cent and 6.3 per cent, respectively. Natural gas output saw contraction of 19.9 per cent, while refinery products output contracted 24.2 per cent.

Mining insulated

While coal output slipped from a modest growth of 4 per cent in March to a year-on-year de-growth in April, the pace of contraction was moderate at 15.5 per cent. Moreover, the contraction in crude oil production deepened only modestly to 6.3 per cent in April from 5.5 per cent in March. This suggests that the mining sector may be relatively insulated during the lockdown, compared to manufacturing, which could cushion the blow on the IIP, said Aditi Nayar, Vice-President and Principal Economist, ICRA, a rating agency.

“Based on the available trends, we anticipate a contraction of 75-80 per cent in industrial output in April (15.8 per cent in March), led by a collapse in manufacturing volumes of non-essential items amid the lockdown, moderate decline in electricity demand and a relatively insulated mining sector,” she said.

Madan Sabnavis, Chief Economist, CARE Ratings, said the contraction of 22.8 per cent in electricity generation was reflection of the sharp decline in industrial production as the household consumption was higher than normal.

Also, the fact that labour was in transit camps meant activity in mining got affected, he said.

“This picture would be replicated in May too though not to this extent. IIP growth too would be in a similar range most probably given the high weight of these industries in the index,” Sabnavis said.