Growth in eight core sectors dips to 1.8% in Nov

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Growth in India’s core sector output slipped to a low of 1.8 per cent in November compared with 7.8 per cent in the same month a year ago, diminishing the hopes for industrial output rebound in coming months.

The growth in core sector industries touched its lowest in July this year at just 1 per cent after which it started rebounding and stood at 2.1 per cent in August, 5.1 per cent in September and 6.5 per cent in October.

The decline in growth in November has been attributed to double-digit decline in production of natural gas, contraction in output of coal and cement apart from decline in growth rates of electricity, steel and petroleum refinery products. The eight industries that have combined weight of 37.9 per cent in the overall index of industrial production (IIP) include crude oil, petroleum refinery products, coal, electricity, cement, finished steel, fertilisers and natural gas.

As per provisional data released by commerce ministry on Monday, cumulative growth in core sector output during April-November stood at 3.5 per cent compared with 4.8 per cent in same period a year ago. Output of natural gas continued to worsen with the highest decline of 15.2 per cent so far this year vis-à-vis a decline of 10.1 per cent in the same period last year. The government also reported coal output contraction of 4.4 per cent in November. This has come as a surprise as it has been in the positive territory during the entire financial year. Coal output had seen robust 21.4 per cent growth and 10.9 per cent increase in production during September and October, respectively, while it was 4.9 per cent in November last year. Even miniscule contraction of 0.2 per cent in the output of cement has come as a surprise as it has come on the back of 13.4 per cent and 6.8 per cent growth in output during previous two months and 17 per cent in November last year.

“Since core sector contributes 37 per cent to overall industrial production, the slower growth in November will certainly dampen IIP, but a lot of it will also depend on the performance of non-core sectors. Though volatility is difficult to predict, I still foresee industrial output to be slightly better in the second half than first six months this financial year,” D K Joshi, principal economist at Crisil said.

Though output in other five sectors have seen some growth, there has been a significant deceleration in some of the key sectors, like refinery products, electricity and steel that have been holding up the overall core sector output so far.

yogimassharma@mydigitalfc.com

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