The output of core sector industries shrunk by 0.1% in March — a 17-month low growth — due to a contraction in production of finished steel, cement, natural gas and refinery items, increasing worries over the pace of industrial recovery.
Eight core-sector industries have a combined weight of 38 per cent in the index of industrial production (IIP). In March last year, the core sector growth was 4 per cent. The previous low was a negative growth of 0.6 per cent in October 2013.
When the core-sector output grew at 1.4 per cent in February, analysts had predicted that the last quarter GDP growth could be a bit less than 7.4 per cent officially estimated.
Industrial production growth had scaled a three-month peak of 5 per cent in February, beating analysts’ expectations of a slowdown for a third straight month, as manufacturing recorded its best performance since May 2014 and consumer goods output hit its loftiest in 27 months.
Favourable bases helped the expansion of both manufacturing and the overall IIP in February (the latter had contracted 2 per cent a year earlier).
Thursday’s data show natural gas production had declined by 1.5 per cent in March, while petroleum refinery output contracted by 1.3 per cent. Steel production declined by 4.4 per cent, while cement output shrunk by 4.2 per cent in March.
Thanks to the measures taken by the government including the Fuel Supply Agreements between Coal India and its buyers, coal production jumped 6 per cent in March.
The growth in coal production was better in February at 11.6 per cent as compared to 1.7 per cent in January. Crude oil production and electricity generation increased by 1.7 per cent each in March.
In April-March last fiscal the cumulative growth for core sector was 3.5 per cent, lower than 4.2 per cent in 2013-14. The latest data indicate that industry growth has not stabilised. FE