Business Standard

Core sector gives faint hope of IIP revival

Growth in output for 8 core sectors saw a meagre improvement to 2.6% in Dec from 1.6%

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As all eyes are on industrial production figures for December to ascertain any firm trend on the growth front. Growth in output for the eight core sectors, constituting over one-third of the factory production, saw a bit of improvement as it rose to 2.6% in December from 1.6% in the previous month.

However, growth in the core industries, which comprises 37.9% of the index of industrial production (IIP), was lower than 4.9% in the same month of 2011-12, official data showed today.

The year-on-year decline in growth was on account of contraction in production of coal, natural gas and fertiliser, the data released by the Ministry of Commerce and Industry showed.

The cumulative expansion of the eight industries -- crude oil, natural gas, cement, coal, electricity, steel, petroleum refinery products and fertilisers -- was down at 3.3% in April-December 2012 against 4.8% in the same period previous fiscal.

As the industrial production saw a contraction of 0.1% in November, against sharp over 8% growth in October, the figures for December is being watched keenly to assess a trend. The figures for October and November are being seen as a pre-Diwali, post-Diwali kind of aberration.

For December, the IIP figures have to rise sharply to show even a reasonable growth. This is so because in December, 2011 IIP stood at 180.3 points versus 167.5 points in November. In November, 2012, IIP was 167.3 points.

Industrial production has seen a constant slump in the entire fiscal witnessing negative growth in five out of eight months till November.

Production of natural gas and coal contracted by 14.9% and 0.2%, respectively, in the month under review, against a growth of (-) 10.8 and 5.5% respectively. Fertiliser output also shrank by 3.8% against 0.8% growth in December 2011.

Steel and electricity production slowed to 5.2% and 4.4%, respectively in the reported period against 10.2% and 8.9%, respectively, in the year-ago period. Cement output slowed to 3.9% from 13.6% in December 2011.

However, Crude oil and petroleum refinery output went up by 1% and 5% against the fall of 5.5% and 0.7%, respectively, in December 2011.

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