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 Page 1


Economic Survey 
2019-20
Volume 2 Chapter 8 
“Industry and Infrastructure”
Page 2


Economic Survey 
2019-20
Volume 2 Chapter 8 
“Industry and Infrastructure”
Introduction
Industrial sector performance is critical to achieving the 
ambitious goal of making India a 5 trillion dollar economy. 
The sector plays a decisive role in determining the overall 
growth of national output and employment. 
Industrial sector has strong forward and backward linkages 
with both Agricultural and Services sector. 
Industrial sector also contributes close to 30% of Gross 
Value Added(GVA). 
But, this sector is vulnerable to various external and internal 
challenges. 
The performance of this sector is measured by Index of 
Industrial Production(IIP).
Page 3


Economic Survey 
2019-20
Volume 2 Chapter 8 
“Industry and Infrastructure”
Introduction
Industrial sector performance is critical to achieving the 
ambitious goal of making India a 5 trillion dollar economy. 
The sector plays a decisive role in determining the overall 
growth of national output and employment. 
Industrial sector has strong forward and backward linkages 
with both Agricultural and Services sector. 
Industrial sector also contributes close to 30% of Gross 
Value Added(GVA). 
But, this sector is vulnerable to various external and internal 
challenges. 
The performance of this sector is measured by Index of 
Industrial Production(IIP).
Trends in Industrial Sector
Industrial sector performance in terms of its contribution in GVA 
improved in 2018-19 over 2017-18. 
However, as per the estimates of GDP by NSO, the real GVA of 
industrial sector grew by 1.6% in first half (H1) of 2019-20, as 
compared to 8.2% in H1 of 2018-19. 
The low growth in Industrial sector is primarily due to 
manufacturing sector which registered a -ve growth in H1 of 2019-20.
Page 4


Economic Survey 
2019-20
Volume 2 Chapter 8 
“Industry and Infrastructure”
Introduction
Industrial sector performance is critical to achieving the 
ambitious goal of making India a 5 trillion dollar economy. 
The sector plays a decisive role in determining the overall 
growth of national output and employment. 
Industrial sector has strong forward and backward linkages 
with both Agricultural and Services sector. 
Industrial sector also contributes close to 30% of Gross 
Value Added(GVA). 
But, this sector is vulnerable to various external and internal 
challenges. 
The performance of this sector is measured by Index of 
Industrial Production(IIP).
Trends in Industrial Sector
Industrial sector performance in terms of its contribution in GVA 
improved in 2018-19 over 2017-18. 
However, as per the estimates of GDP by NSO, the real GVA of 
industrial sector grew by 1.6% in first half (H1) of 2019-20, as 
compared to 8.2% in H1 of 2018-19. 
The low growth in Industrial sector is primarily due to 
manufacturing sector which registered a -ve growth in H1 of 2019-20.
Index of Industrial Production
It is an index that shows the growth rates in the physical volume of production of different industry 
groups of the economy in a fixed period of time. 
It is compiled and published monthly by NSO, under Ministry of Statistics and Programme Implementation. 
This composite indicator is classified in following ways: 
1. Sectoral Classification 
2. Use-Based Classification
Page 5


Economic Survey 
2019-20
Volume 2 Chapter 8 
“Industry and Infrastructure”
Introduction
Industrial sector performance is critical to achieving the 
ambitious goal of making India a 5 trillion dollar economy. 
The sector plays a decisive role in determining the overall 
growth of national output and employment. 
Industrial sector has strong forward and backward linkages 
with both Agricultural and Services sector. 
Industrial sector also contributes close to 30% of Gross 
Value Added(GVA). 
But, this sector is vulnerable to various external and internal 
challenges. 
The performance of this sector is measured by Index of 
Industrial Production(IIP).
Trends in Industrial Sector
Industrial sector performance in terms of its contribution in GVA 
improved in 2018-19 over 2017-18. 
However, as per the estimates of GDP by NSO, the real GVA of 
industrial sector grew by 1.6% in first half (H1) of 2019-20, as 
compared to 8.2% in H1 of 2018-19. 
The low growth in Industrial sector is primarily due to 
manufacturing sector which registered a -ve growth in H1 of 2019-20.
Index of Industrial Production
It is an index that shows the growth rates in the physical volume of production of different industry 
groups of the economy in a fixed period of time. 
It is compiled and published monthly by NSO, under Ministry of Statistics and Programme Implementation. 
This composite indicator is classified in following ways: 
1. Sectoral Classification 
2. Use-Based Classification
Decline in Industrial growth is due to subdued manufacturing 
activities. 
The reason for poor performance of manufacturing sector is 
due to : 
-
Slower credit flow to medium and small scale industries  
-
Reduced lending by NBFCs owing to liquidity crunch 
-
Tapering of domestic demand for key sectors such as 
automotive sector, pharmaceuticals and machinery & equipment 
-
Volatility in international crude oil prices 
-
Prevailing trade related uncertainties etc. 
Exports of key labour intensive sectors such as gems & 
jewellery, basic metals, leather products and textiles have 
underperformed in the current year.