June industrial output seen contracting on GST de-stocking

India’s industrial output may have contracted in June as companies scaled down output to curb inventories ahead of the goods and services tax (GST) rollout, a poll showed on Tuesday. The index of industrial production data for June is scheduled to be released on Friday.

The index of industrial production (IIP) is likely to have contracted 0.50 per cent in June, the first fall since June 2013, compared with 1.70 per cent growth in May, a TickerNews poll of economists showed.

“On the back of de-stocking ahead of the GST rollout on July 1, industrial activity is expected to have remained subdued in June,” said Kavita Chacko, senior economist with Care Ratings.

Passenger vehicle (PV) sales dipped at the sharpest rate since March 2013 ahead of GST rollout. Total vehicle sales contracted by 10.46 per cent on month-on-month basis, while it rose at slower pace of 5 per cent on year-on-year basis. Production of cement, an indicator of construction activities, declined by 5.8 per cent in June 2017 over the same month of the previous year.

The infrastructure sector growth slowed to a 19-month low in June. Reduced output of cement, electricity and coal slowed the pace of expansion of the eight infrastructure sectors in June to 0.4 per cent, according to the eight-core sector data released earlier this month.

– TickerNews Service