New Delhi, India's factory output in June showed a healthy pickup from the May level, but remained deeply in the red on a yearly basis.

As per the Quick Estimates of Index of Industrial Production (IIP), industrial activity accelerated by 20.4 per cent from May's level. However, on a year-on-year basis, it remained deep in the red with a contraction of 16.6 per cent.

In the corresponding period of last year, the IIP had registered a growth of 1.3 per cent.

The estimates documents released by the Ministry of Statistics and Programme Implementation said that the current indices should not be compared with those of the months preceding the Covid-19 pandemic.

"For June 2020, the Quick Estimates of IIP with base 2011-12 stands at 107.8," the ministry said.

"The indices of industrial production for the mining, manufacturing and electricity sectors for June 2020 stand at 85.4, 106.9 and 1 56.2, respectively," it added.

In terms of sub-index basis, the pace of recovery in industrial output was mixed across the sectors in June 2020.

The output reading of the manufacturing sector stood at 106.9 in June from May's 83.6 and 129 in the like period of last year.

Similarly, the mining activity stood at 85.4 from a YoY reading of 106.5 and 87.5 in May.

The sub-index of electricity generation was higher by 156.2 per cent from 150.6 in May.

"The IIP charted an expected recovery in June 2020, with its pace of contraction narrowing to 16.6 per cent, in line with our forecast (-17.5 per cent), primarily driven by the improvement in manufacturing," ICRA Principal Economist Aditi Nayar told IANS.

"As compared to the contraction of 36 per cent in industrial output in Q1 FY2021, we project the YoY degrowth in GDP at constant prices at around 25 per cent for that quarter, with some support from the agricultural sector and government spending that were relatively insulated during the lockdown," Nayar added.

According to Devendra Kumar Pant, Chief Economist and Senior Director, Public Finance, India Ratings & Research: "Sequential improvement in June 2020 was on expected lines. However, economic activities hasn't improved much in the month of July and August and does not give confidence for a quick recovery."

"India Ratings believes economy to contract at least by 5.3 per cent. Moreover, all four quarters are expected to have negative growth. Retail inflation breaching MPC's upper band of 6 per cent in two consecutive quarters (factoring in imputed CPI for April and May 2020) makes the task of the MPC difficult. India Ratings believes MPC will watch inflation trajectory very carefully before taking decision on further rate cuts," Pant said.