Eight core sector industries grew by 5.2% in June

Despite the unfavorable environment of growth, the production of eight core industries has more or less been able to maintain its pace of growth. For the month of June, the output of eight core sector, which have 37.90% weight in the Index of Industrial Production (IIP) with base year of 2004-05, registered a growth of 5.2% from last year, which is less than the growth achieved in May 5.3%.  However, for the first quarter of current financial year, the Index of eight core industries grew by 5.0% from 6.8% in corresponding period of last fiscal year, which shows moderation in the output of the core industries due to high inflation and increasing interest rates.   

The eight core sector industries  i.e. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity, have a combined weight of 37.9% in the IIP, making it a good lead indicator of industrial growth. According to the data released by the Ministry of Commerce & Industry on July 29, eight core sector industries, stood at 138.98 in June 2011 and registered a growth of 5.2% compared to 4.4% registered in June 201. During April-June 2011-12, eight core industries registered a growth of 5.0% as against 6.8% during the corresponding period of the previous year 2010-11.

For the month of June, steel, electricity, crude oil and petroleum refinery products, saw positive growth. Steel production registered a growth of 12.5% in June 2011 compared to 4.3% in June 2010. Steel production grew by 7.8% during April-June 2011-12 compared to an increase of 8.6% during the same period of 2010-11. Electricity generation registered a growth of 8.2% in June 2011 compared to a growth of 3.8% in June 2010. Electricity generation grew by 8.3% during April-June 2011-12 compared to 5.7% during the same period of 2010-11. Crude Oil production registered a growth of 7.7% in June 2011 compared to a growth of 6.8% in June 2010. The Crude Oil production registered a growth of 9.5% during April-June 2011-12 compared to 5.9% during the same period of 2010-11. Petroleum refinery production registered a growth of 4.7% in June 2011 compared to growth of 2.9% in June 2010. The Petroleum refinery production registered a growth of 5.3% during April-June 2011-12 compared to 5.3% during the same period of 2010-11.

However, sectors such as natural gas, coal, fertilizers and cement saw a negative growth in the month of June. Natural Gas production registered a growth of (-) 11.7% in June 2011 compared to growth of 25.4% in June 2010. The Natural Gas production registered a growth of (-) 10.2% during April-June 2011-12 compared to 37.0% during the same period of 2010-11. Coal production registered a growth of (-) 3.3% in June 2011 compared to growth of 0.8% in June 2010. Coal production grew by 0.2% during April-June 2011-12 compared to an increase of (-) 0.6 during the same period of 2010-11. Fertilizer production registered a growth of (-) 2.4% in June 2011 compared to (-) 6.7% in June 2010.Fertilizer production grew by 1.1% during April-June 2011-12 compared to an increase of (-) 2.6% during the same period of 2010-11. Cement production registered a growth of (-) 0.8% in June 2011 compared to 3.7% in June 2010. Cement Production grew by (-) 0.9% during April-June 2011-12 compared to an increase of 7.0% during the same period of 2010-11.

The eight core sector industries are an important indicator for the industrial growth and for health of the industrial growth. The stable eight core sector industries data for month of June indicates the IIP growth would be near by the May month’s figure. However, healthy growth in steel, electricity, and crude oil and natural gas in month of June, indicating increase of industrial activities in industry.