October 1, 2020 3:56:11 am
Contracting for the sixth straight month in August, core industries’ output declined 8.5 per cent, compared to a 0.2 per cent decline in year-ago period, according to data shared by the Ministry of Commerce and Industry on Wednesday. However, the pace of contraction picked up, as against the last three months. This rate is marginally sharper than the 8 per cent decline recorded in July.
Except for coal and fertilisers, production continued to decline in most core sectors in August, according to the data.
The drop in August is due to factors like low demand, unavailability of equipment for setting up newer production platforms as well as seasonal and lockdown restrictions. “On a month-on-month basis, the deterioration can be ascribed to localised lockdowns announced in some states, which weighed on output partially,” stated CARE Ratings in a release. The cumulative growth of these sectors during FY20 was 0.3 per cent — lowest in eight years.
The steepest decline in August was observed in refinery products, which dropped 19.1 per cent. This was followed by cement, which saw a 14.6 per cent decline in output, natural gas, which declined 9.5 per cent and steel and crude oil production — both of which dropped 6.3 per cent.
Refinery products, at 28 per cent, accounts for the highest proportion of the index. Electricity production, which makes up around 19.9 per cent of the index, dropped 2.7 per cent in August, while coal production grew 3.6 per cent. Fertiliser production, which accounts for approximately 2.6 per cent of the index, grew 7.3 per cent in August.
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