Core sector growth surges to 16-month high of 6.4% in March

03 May 2016 Evaluate

Making a strong end for the financial year 2015-16 and pointing to a possible industrial recovery ahead of the new financial year, the core sector growth in the country has jumped to 16-month high in the month of March. The eight core sector industries grew to 6.4 percent in the month of March. The eight industries - crude oil, petroleum refinery products, natural gas, fertilisers, coal, electricity, cement and finished steel have a weight of 38 percent in the overall Index of Industrial Production (IIP) had shrunk to (-) 0.7 percent in March last year. During the fiscal 2015-16 as a whole, the eight core sectors grew by 2.7 percent, while it had expanded by 4.5 per cent in 2014-15. The March 2016 performance is the best since November 2014, when these sectors had expanded by 6.7 per cent.

According to data released by the ministry of commerce and industry, the combined Index of Eight Core Industries stood at 188.0 in March, 2016, which was 6.4 percent higher compared to the index of March, 2015. Its cumulative growth during April to March, 2015-16 was 2.7 percent. Out of eight sector, only two sectors posted negative output growth in March.

Among the eight sectors, four sectors registered a double digit growth. Petroleum Refinery production having weight age of 5.94 percent increased by 10.8 percent in March, 2016 over March, 2015. Its cumulative index during April to March, 2015-16 increased by 3.8 percent over the corresponding period of previous year. Fertilizer production having 1.25 percent weight increased by 22.9 percent in March, 2016 over March, 2015. Its cumulative index during April to March, 2015-16 increased by 11.3 percent over the corresponding period of previous year. Cement production having weight age of 2.41 percent increased by 11.9 percent in March, 2016 over March, 2015. Its cumulative index during April to March, 2015-16 increased by 4.6 percent over the corresponding period of previous year. Electricity generation having weight 10.32 percent increased by 11.3 percent in March, 2016 over March, 2015. Its cumulative index during April to March, 2015-16 increased by 5.2 percent over the corresponding period of previous year.

Besides, Coal production having weight 4.38 percent increased by 1.7 percent in March, 2016 over March, 2015. Its cumulative index during April to March, 2015-16 increased by 4.6 percent over corresponding period of previous year. Steel production having weight age of 6.68 percent increased by 3.4 percent in March, 2016 over March, 2015. Its cumulative index during April to March, 2015-16 declined by 1.4 percent over the corresponding period of previous year.

On the other side, Crude oil and natural gas were the two sectors that suffered a fall in production in March. Crude Oil production having weight 5.22 percent decreased by 5.1 percent in March, 2016 over March, 2015. Its cumulative index during April to March, 2015-16 decreased by 1.4 percent over the corresponding period of previous year. The Natural Gas production having 1.71 percent weight decreased by 10.5 percent in March, 2016 over March, 2015. Its cumulative index during April to March, 2015-16 declined by 4.2 percent over the corresponding period of previous year.

The pick-up in the momentum of core sector growth in March was a ‘positive surprise’ and a favorable base effect as well as the pick-up in the pace of expansion of the core sector and automobile production augur well for a mild improvement in IIP growth in March.

Core sector growth surges to 16-month high of 6.4% in March

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