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Macroscope – IIP – Reading Of IIP Index For The Month December 2020

Written by - Tejesh Kumar

February 15, 2021 2 minutes

What is index of industrial production data (IIP)?

IIP measures the industrial production on a monthly basis, highlighting state of 3 growth driving verticals. It is a key indicator of the manufacturing sector of the economy.

Its Economy based are as follows:

Macroscope

Its Use based are as follows:

Macroscope

What does IIP Index data mean for Financial Markets?

It serves as an indicator of corporate earnings, influencing equity & debt investors alike.

It is also a good parameter to understand the industrial activity in the country.

IIP Reading – December 2020

What is the latest reading?

IIP increases by 1.0% in Dec’20 vs decline of -2.1% in Nov’20 and 0.4% in Dec’19 .

Macroscope 3

Investor Takeaway

IIP recorded modest growth of 1% after degrowth in the month of November 2020. Improvement in IIP is due to recovery which can be seen in other high frequency indicators like manufacturing PMI, core sector output, auto production, and cargo traffic.

IIP during April -December 2020 recorded contraction of 13.5% from year ago period, as disaggregated data continues to question sustainability in recovery in very near periods.

Element Trajectory

macroscope 4

Revival of consumption is visible by significant uptick in Consumer Durables and Consumer non durables segment, courtesy of gradual improvement in rural demand.

Capital goods (indicating investments) — maintained its growth in December 2020 as well. Even after recording positive growth, said element is sitting 8% below its pre-Covid level.

Among three key sectors, manufacturing and electricity reported growth whereas mining continued to stay in the red, albeit with lesser intensity. Budget FY22 has further bolstered upside potential of future readings due to enhancements in agri credit, higher allocation to Rural Infra Development Fund, and doubling outlays to Micro Irrigation Fund.

With demand gradually getting back on track, mobility returning to normal levels amidst falling COVID infection curve and collaborative growth-oriented efforts of the RBI and the government, India can look to become the global growth engine of the ensuing decade.

Click Here If you want to read the complete IIP Index press release

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