Core sector output contracts by 1.3% in November 2015

01 Jan 2016 Evaluate

India’s core sector, after expanding for six consecutive months contracted 1.3% in November, dragged down by a sharp decline in steel production due to weak demand and imports. Registering the steepest fall in over a decade, the output in the eight key infrastructure industries, comprising nearly 38 % of the weight of items included in the Index of Industrial Production (IIP) plunged in November 2015 by 1.3 per cent compared to the same month a year ago, indicating a possible hiccup in the nascent economic recovery and a downturn in industrial production. Last time, the sectors were in negative zone was in April, when they shrank by 0.4%, while the rate of growth rate in October was 3.2%.

According to that data released by the ministry of Commerce and Industry showed the combined Index of eight core industries coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity stands at 166.8 in November, 2015, which was 1.3% lower compared to the index of November, 2014. Its cumulative growth during April to November, 2015-16 was 2.0%.

The decline in the core sector growth for the month of November was mainly on account of contraction in the output of steel, cement and crude oil production. Crude Oil production having weight of 5.22% declined by 3.3% in November, 2015 over -0.1% in November, 2014. Its cumulative index during April to November, 2015-16 decreased by 0.4% over the corresponding period of previous year. Natural gas production with the overall weight of 1.71% contracted by 3.9% in November, 2015, over -2.3% in November last year. Its cumulative index during April to November, 2015-16 declined by 2.3% over the corresponding period of previous year. Steel production having weight of 6.68% declined by 8.4% in November, 2015 over 9.9% in the same period last year. Its cumulative index during April to November, 2015-16 declined by 1.5% over the corresponding period of previous year. Cement production having weight of 2.41% decreased by 1.8 % in November, 2015 over 10.5% in November 2014. Its cumulative index during April to November, 2015-16 increased by 2.1% over the corresponding period of previous year.

On the flip side, Coal production having weight of 4.38% increased by 3.5% in November, 2015 over November, 2014. Its cumulative index during April to November, 2015-16 increased by 4.3% over corresponding period of previous year. Petroleum Refinery production having weight of 5.94%,increased by 2.5 % in November, 2015. Its cumulative index during April to November, 2015-16 increased by 2.5% over the corresponding period of previous year. Fertilizer production having weight of 1.25%, increased by 13.5 % in November, 2015 over - 2.8% in the same month last year. Its cumulative index during April to November, 2015-16 increased by 9.7 % over the corresponding period of previous year.

Meanwhile, Electricity generation having weight of 10.32% recorded no change in November, 2015 over November, 2014. Its cumulative index during April to November, 2015-16 increased by 4.2% over the corresponding period of previous year.

The fall in core sector output may curb industrial growth, which reached a five-year high of 9.8% in October. Part of the contraction in core sector output can be attributed to the fewer number of working days as compared with November 2014 and the shift in the festival was in October last year.

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Core sector output contracts by 1.3% in November 2015

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