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India's virus-hit industrial output shrinks 16.6% in June

NEW DELHI (Reuters) - India’s industrial output fell 16.6% year-on-year in June, shrinking for the fourth month in a row, though the monthly measure indicated some recovery in the coronavirus-hit sector.

A worker grinds a gear rod used in a textile machine inside a small scale manufacturing unit in Ahmedabad, India, April 12, 2016. REUTERS/Amit Dave/File Photo

Analysts polled by Reuters had expected a contraction of 20.0% in June, compared to a revised 33.9% annual contraction in May, the data showed.

Industrial activity has been hit hard in Asia’s third-largest economy after the government imposed lockdown restrictions in late March.

“With the lifting of restrictions in the subsequent periods, industrial activity is resuming,” the Ministry of Statistics and Programme Implementation said in a statement on Tuesday.

Private economists, however, said the economy was staring at the worst economic slowdown since independence from British colonial rule in 1947.

The number of people infected with the coronavirus in India has crossed 2.2 million, with 45,257 deaths, and epidemiologists say the peak could be months away.

The weekend lockdown in many Indian states and restrictions on public transport have hit production in factories and domestic and overseas sales of garments, vehicles and consumer durables.

Manufacturing, which contributes nearly 17% to the economy, contracted 40.7% in the three months to end-June, indicating a sharp fall in economic activity.

Passenger vehicle production in July fell 29.4% from a year earlier, separate data released by an industry body on Tuesday showed.

Economists have predicted the economy could contract as much as 20% in the April-June quarter.

GDP data for the June quarter is due to be released at the end of the month.

The government had forecast 6% economic growth in the current fiscal year beginning April, before the coronavirus hit, and has since maintained that there are signs of recovery as reflected by tax collection numbers.

Reporting by Manoj Kumar; Editing by Catherine Evans