India: Core sector growth slows down to 2.1% in February
The growth of eight core industries slowed down to 2.1 per cent in February largely due to a fall in crude oil and petroleum refinery production and stagnant performance of the electricity sector.
The overall-growth of the eight core sectors, which also include coal, natural gas, fertiliser, steel and cement, in the April-February 2018-19 period, was 4.3 per cent. The sectors had expanded to 5.4 per cent in February last year.
According to Madan Sabnavis, Chief Economist, CARE Ratings: “While the base effect is a part of the explanation (for slowdown), it is also true that this has not held back growth in cement and steel which contended with the same base effect. Quite clearly in the infrastructure space there is limited activity which is being spear-headed by the government especially in roads, railways and urban development. Private sector involvement remains fragile as of now.”
The slowdown is likely to dampen the Index of Industrial Production (IIP) for the month as the eight core sectors account for more than 40 per cent of weight of items included in the index.
Coal production (weight of 10.33 per cent) increased by 7.3 per cent in February. “Its cumulative index increased by 7.1 per cent during April to February 2018-19 over the corresponding period of the previous year,” an official statement said.
Another high performance sector was cement (weight of 5.37 per cent) with production increasing by 8 per cent in February. Cumulative growth was at 13 per cent during April-February, 2018-19 over the corresponding period of previous year.
Steel production (weight of 17.92 per cent), increased by 4.9 per cent during the month, while in the April-February 2018-19 period, the sector posted a growth of 4.7 per cent.
Natural gas production (weight: 6.88 per cent) increased by 3.8 per cent in February, while in the April-February 2018-19 period, the sector posted a low growth of 0.8 per cent. Crude oil production (with a weight of 8.98 per cent) declined by 6.1 per cent in February, while in the April-February 2018-19 period it declined by 4 per cent.
In step with crude oil production, petroleum refinery production (weight of 28.04 per cent) too, declined, although at a lower rate of 0.8 per cent. Its cumulative index increased by 3 per cent during April-February 2018-19.
Fertiliser production (with a weight of 2.63 per cent) increased by 2.5 per cent in February, while growth remained almost static at 0.02 per cent in April-February 2018-19.
Performance of the electricity sector (weight of 19.85 per cent) was lacklustre in February with generation increasing by 0.7 per cent over February, 2018.
Cumulative electricity generation increased by 5.4 per cent during April to February.