The core sector growth spike in April petered out in May as output of eight core industries decelerated to a four-month low to 2.3% from 5.9% in the same month a year ago on account of dismal performance by steel and power sector. Cumulative growth of the eight core industries during April-May rose by 3.3%.
The deterioration in performance of steel and electricity relative to the previous month were largely responsible for the drag of core sector, which has a combined weight of 37.90% in the Index of Industrial Production (IIP), in spite of improved performance of coal, fertilizers and cement. While, steel production shrank 2% as against a growth of 3.1% in April, electricity generation grew 6.3% as against 11.2% in April.
On the flip side, Fertilizer production grew by 17.6% during the month compared to 11.1% in April, similarly, coal production rose 5.5% during the month as against 3.3% a month ago and contraction of 3.3% during the same period last fiscal. Besides, Cement production also improved during the month, posting a growth of 8.7% against 6.7% in April.
The bad news on the core sector front comes at a time when rains during the month of June have been declared to be 43 per cent deficient. Notwithstanding, the poor show by the steel and electricity sector, the IIP for May is expected to do well, given the robust performance by other sectors like fertiliser and a favourable base effect.
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