The average growth rate of industrial production of eight core industries started showing signs of recovery after a steep decline in April 2020 but still clocked a decline of 1.3 per cent in December, compared with a contraction of 1.4 per cent in November. Only the coal and electricity sectors clocked positive growth in December 2020, government data shows. The eight core Industries includes coal, crude oil, natural gas, petroleum refinery, fertilisers, steel, cement and electricity.
The Covid-19 pandemic adversely impacted some of the major economies of the world such as the US, European Union, the UK and Japan. Similarly in India, several sectors were affected due to the nation-wide lockdown to help curb the spread of Covid-19. However, after the pandemic-imposed lockdown was relaxed, improvement has been seen in several sectors of the economy.
In response, the Union government implemented several major reforms in recent years to boost industrial production and gross domestic product (GDP) growth. Among the measures the government implemented the Insolvency and Bankruptcy Code (IBC) and recapitalised banks. Among the other important measures implemented were the Goods and Services Tax (GST) to simplify the indirect taxation rules, Make-in-India initiative to boost domestic manufacturing capacity, liberalisation of Foreign Direct Investment (FDI) and Jan Dhan-Aadhaar-Mobile trinity. The trinity refers to the government of India initiative to link Jan Dhan accounts, mobile numbers and Aadhar cards of Indians to plug the leakages of government subsidies.
In September 2019, the corporate tax rate was reduced to 15 per cent for new domestic manufacturing companies. The Union government unveiled the Rs.103 lakh crore National Infrastructure Pipeline to significantly boost infrastructure and spur growth. The Union Budget 2021-22 has announced a number of growth improvement measures such as a hike in custom duty to benefit Make in India policy, critical measures to boost infrastructure, innovation and research and development (R&D).