The Economic Survey 2019-20 stated that industrial sector performance in terms of its contribution in Gross Value Added (GVA) improved in 2018-19 over 2017-18. However, as per the estimates of Gross Domestic Product by National Statistical Office (NSO), the real GVA of industrial sector grew by 1.6 per cent in first half (H1) (April-September) of 2019-20, as compared to 8.2 per cent in H1 of 2018-19. The low growth in industrial sector is primarily due to manufacturing sector which registered a negative growth of 0.2 per cent in 2019-20 H1.

Overall, IIP growth has moderated to 3.8 per cent in 2018-19 compared to 4.4 per cent in 2017-18. During the current year 2019-20 (April-November), it grew at 0.6 per cent as compared to 5 percent in the corresponding period of previous year. The moderation in growth is mainly arising from subdued manufacturing activities due to slower credit flow to Medium and Small industries, reduced lending by NBFCs owing to liquidity crunch, tapering of domestic demand for key sectors such as automotive sector, pharmaceuticals, and machinery and equipment, volatility in international crude oil prices, prevailing trade related uncertainties.

The growth of infrastructure/construction goods declined by 2.7 per cent in the current financial year 2019-20 (April-November). Intermediate goods and consumer non-durable registered positive growth in November 2019, however, primary goods, capital goods, infrastructure/construction goods and consumer durables reported negative growth in November 2019.

Gross Capital Formation (GCF) in industry has registered a rise from (-) 0.7 per cent in 2016-17 to 7.6 per cent in 2017-18 showing upward momentum of investment in industry. Mining and quarrying, manufacturing, electricity, gas, water supply and other utility services and construction had registered a growth rate of 7.1 per cent, 8.0 per cent, 6.1 per cent and 8.4 per cent respectively in 2017-18.

Growth in gross bank credit flow to the industrial sector, on a year on year basis, rose to 2.7 per cent in September 2019 as compared to 2.3 per cent in September 2018. Credit flow industries like wood and wood products, all engineering, cement and cement products, construction and infrastructure increased in September 2019 as compared to September 2018.

The manufacturing sector contracted in Q1 of 2019-20 mainly due to a production slowdown. Petroleum products, iron and steel, motor vehicles and other transport equipment companies were the major contributors to the slowdown.

Net profit of corporate sector recovered in Q2 of 2019-20 and was 17.4 per cent. Sales growth of over 1,700 listed private manufacturing companies contracted by 7.7 per cent in Q2 of 2019-20 after remaining in expansionary zone since Q2 of 2016-17. The capacity utilization of India’s manufacturing sector remains stable at 73.6 per cent in Q1 of 2019-20 as compared to 73.8 per cent in Q1 of 2018-19.

Growth of Eight Core industries (Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity) stood flat during the current financial year (April-November, 2019). During the corresponding period of the previous year, these industries grew at 5.1 per cent. While fertilizers, steel and electricity have seen expansion in their production, production of coal, crude oil, natural gas and refinery products have contracted during the current financial year.