Growth in eight core sectors slows to 3.2 per cent in October

01 Dec 2015 Evaluate

The growth in eight core sectors -- coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity, which comprise nearly 38% of the weight of items included in the Index of Industrial Production (IIP), slowed to 3.2% in October 2015 compared to 9% in the corresponding month last year on the back of sharp decline in crude oil and steel production. The October output was the same as in the previous month but a robust increase in coal and cement output and strong electricity generation provided some relief.

The combined Index of Eight Core Industries stands at 175.4 in October, 2015, which was 3.2% higher compared to the index of October, 2014. Its cumulative growth during April to October, 2015-16 was 2.5 %. According to data released by the ministry of commerce and industry, crude oil, natural gas, refinery products and steel recorded negative growth in October, while cement and fertiliser sectors posted double-digit growth.

Among eight core sectors, the coal having 4.38% weight showed an uptick move by increasing production 6.3% in October, 2015 over October, 2014. Its cumulative index during April to October, 2015-16 increased by 4.5% over corresponding period of previous year. Electricity, having 10.32% weight, increased generation by 8.8% in October, 2015. Its cumulative index during April to October, 2015-16 increased by 4.7% over the corresponding period of previous year.

Fertilisers having 1.25% weight in IIP index continued to grow by 16.2% in October, 2015. Its cumulative index during April to October, 2015-16 increased by 9.2% over the corresponding period of previous year. Cement production (weight 2.41%) has seen double-digit growth after more than a year. The sharp turnaround is because of a favourable base effect - production had fallen 1.2 per cent a year earlier - and possibly also due to a pickup in some infrastructure sectors and the replenishment of inventories post a contraction last month. The production increased by 11.7% in October, 2015. Its cumulative index during April to October, 2015-16 increased by 2.6% over the corresponding period of previous year.

Meanwhile, crude oil production (weight of 5.22%) decreased by 2.1% in October, 2015 over October, 2014. Its cumulative index during April to October, 2015-16 increased by 0.03% over the corresponding period of previous year. Steel production (weight 6.68%) was down by 1.2% in October, 2015. Its cumulative index during April to October, 2015-16 declined by 0.5% over the corresponding period of previous year. Steel output has been sluggish because of competition from cheaper imports. Natural Gas production, having weight 1.71% declined 1.8% in October, 2015. Its cumulative index during April to October, 2015-16 declined by 2.1 % over the corresponding period of previous year. Petroleum Refinery output having weightage 5.94% contracted 4.4 % in October, 2015 after having grown for five months. Its cumulative index during April to October, 2015-16 increased by 2.4% over the corresponding period of previous year.

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