Demonetisation Takes Further Toll – Consumer Durables Plummet By Over 10%

Manmohan Singh Terms demonetisation Organised Loot
File Photo of a demonstration, post Demonetisation

At a time when polling in UP is going on and much is at stake for the BJP govt at the centre, the bad news from the industrial sectors adds to the many woes that the party is struggling with. Per the report, Demonetisation took a further toll on industrial activity as output contracted to four-month low of 0.4 per cent last December with consumer durables taking the worst hit, plummeting by over 10 per cent due to cash crunch. The factory output had contracted 0.9 per cent in December 2015.

The latest decline reflected deterioration in the manufacturing sector on account of cash crunch following the scrapping of the Rs 500/1000 notes on November 8, 2016. The industrial output was 5.7 per cent in November and did not capture the impact of demonetisation.

Although Finance Minister Arun Jaitley said the contraction in industrial production in December was due to fallout of demonetisation and expected a pick-up and greater expansion in the coming months, but there are a few takers. The Economists opposed to the FM’s move argue that the damage has already been done and will take years for the economic activity to recover to just the level it was before demonetisation.

Factory output measured in terms of Index of Industrial Production (IIP) in December declined on account of 2 per cent contraction in manufacturing sector, as against 1.9 per cent decline a year ago.watch full I Don’t Feel at Home in This World Anymore 2017 film

According to data released by the Central Statistics Office on Friday, the previous low was a contraction of 0.7 per cent in August.

During the April-December period of the current fiscal, IIP growth remained almost flat at 0.3 per cent compared to 3.2 per cent growth in the nine month period of 2015-16.

Output of consumer durables segment – TVs, refrigerators and washing machines – declined by 10.3 per cent during the month under review from robust growth of 16 ao0vdlr.6 per cent reflecting the impact of currency crunch.

The consumer non-durable mainly including FMCG items too contracted by 5 per cent in December, as against a contraction of 2.7 per cent year ago.

Overall consumer goods output showed a contraction of 6.8 per cent compared to growth of 3.2 per cent in December 2015.

Capital goods segment, barometer of investments, declined by 3 per cent as against 18.6 per cent decline in December 2015.

As per use-based classification, the growth rates are 5.3 per cent in basic goods and (-)1.2 per cent in intermediate goods.

However, the power generation showed a growth of 6.3 per cent in December compared to 3.2 per cent in the same month a year. The mining output also grew by 5.2 per cent in December compared to 2.8 per cent in the same month year ago.

Overall, 17 out of 22 industry groups in the manufacturing sector have shown negative growth in December. The Negative trends now additionally contradict the various claims made by the ruling party about demonetisation implementation.

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