Growth in the core sectors of the economy has nearly halved from March, recording a 2.6 per cent growth in April. This is a result of subdued growth in the cement, coal and steel segment, sustained drop in crude oil production and contraction in the fertilisers segment.The growth of the country’s eight core sectors — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — is a lead indicator of the monthly industrial performance.
The cumulative growth of these sectors during the 2018-19 financial year was 4.3 per cent. The growth in March was 4.7 per cent — the highest since October 2018.
Data released by the Ministry of Commerce and Industry on Friday showed that the overall index of these eight segments grew by 4.7 per cent in April 2018.
Refinery products, which make up nearly 30 per cent of the index, rose by 4.3 per cent in April 2019 over April 2018, continuing the positive trend of growth from March 2019.
However, coal and steel, which account for 10.33 per cent and 17.92 per cent respectively, grew only by 2.8 per cent and 1.5 per cent in April. Growth in these sectors in March was higher, at 9.1 per cent and 6.7 per cent.
Growth in cement dropped drastically to 0.8 per cent from 15.7 per cent in March.
The crude oil segment continued to drop on the back of rising prices, registering a de-growth of 6.9 per cent. This is the third month that production has dropped over 6 per cent.
Production of fertilisers, too, dropped 4.4 per cent in April, as opposed to a growth of 4.3 per cent in March.
However, growth in the electricity sector, which accounts for nearly 20 per cent of the index, accelerated 5.8 per cent, up from 2.1 per cent in March.
“The moderation in the core sector growth could translate into lower industrial production growth in the first month of FY20. We expect IIP to grow at 2-2.5 per cent and project industrial output growth in the range of 4.5-5 per cent for FY20,” stated CARE Ratings in its analysis of the data.
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