16-month high: Core sector expands by 6.4% in March

This was despite a sharp rise in the growth rate to 6.4 per cent in March for the eight sectors — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity.

These sectors, comprising nearly 38 per cent of India’s total industrial production, had shrunk by 0.7 per cent in the year-ago month of March 2015.

The March 2016 performance is the best since November 2014, when these sectors had expanded by 6.7 per cent.

Output in refinery products, fertilser, cement and electricity jumped by 10.8 per cent, 22.9 per cent, 11.9 per cent and 11.3 per cent respectively in March, according to the data released by the commerce ministry.

However, crude oil and natural gas recorded negative growth during the month under review. Coal production grew by 1.7 per cent, though at a slower pace than 4.5 per cent recorded in March 2015. Steel output, on the other hand, grew by 3.4 per cent as against (-) 6.5 per cent in March 2015.

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Commenting on the figures, ICRA said the pick-up in the momentum of core sector growth in March was a “positive surprise”.

“A favourable base effect as well as the pick-up in the pace of expansion of the core sector and automobile production augur well for a mild improvement in IIP growth in March,” it said in a statement.

In February, the growth in output of eight core-sector industries had risen to a 15-month high of 5.7 per cent , marking a third straight monthly rise and recording a broad-based recovery.

Barring coal, seven of the core-sector constituents had recorded a sequential improvement in February. A year-on-year contraction in steel output was also contained at just 0.5 per cent in February, compared with a fall of 8.4 per cent in the previous month, suggesting Centre’s moves to protect domestic primary steel producers against cheaper imports were starting to have an impact. The imposition of minimum import price for steel imports had helped to restrict the contraction to just 0.5 per cent in February.

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