Growth of eight core sectors dropped to 1.8 per cent in January — the lowest in the last 19 months — primarily on lower production of electricity, crude oil and refinery products, data from the Commerce Ministry showed on Thursday.
The index of the eight sectors comprising coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity grew by 6.2 per cent in January 2018. The ministry, in a release, stated that these sectors recorded a 4.5 per cent growth rate during April-January 2018-19 against a 4.1 per cent growth in the same period in 2017-18.
Production of crude oil, electricity and refinery products contracted by 4.3 per cent, 0.4 per cent and 2.6 per cent, respectively, in January 2019. In the same period last year, crude oil production had reduced by 3.2 per cent, while electricity and refinery products had grown by 7.7 per cent and 11 per cent, respectively.
Coal and cement output growth also slowed to 1.7 per cent and 11 per cent in January, compared with 3.8 per cent and 19.6 per cent for the same month in 2018. At the same time, natural gas, fertilisers and steel production grew 6.2 per cent, 10.5 per cent and 8.2 per cent in January 2019, compared with de-growths of 1.2 per cent and 1.6 per cent and a growth of 1.7 per cent for these sectors in the same period last year. The eight core industries comprise 40.27 per cent of the weight of the items included in the Index of Industrial Production, and the low overall output is expected to impact the index.
Continued sluggishness in industrial activities
The growth of core infrastructure industries slipping to a 19 month low in January 2019 was triggered by a visible contraction in crude oil, refinery products and electricity. The contraction in the electricity sector growth in January (-0.4 per cent) was despite this winter being unusually cold in north India. Cement, fertiliser, steel and natural gas bucked the broader trend. Analysts say the declining trend in core sector growth from October 2018 points to continued sluggishness in industrial activities and a weak second half economic growth.
“Declining trend in core sector growth from October 2018 suggests continued weakness in industrial activities and a weak second half economic growth. Expect a low industrial growth in the month of January 2019,” Devendra Kumar Pant, chief economist, India Ratings and Research was quoted by a PTI report as saying.