Core sector growth at 3.2% in July

Main push from sharp pick-up in refinery products; barring coal, other 6 rise only marginally

Growth in the eight core sectors stood at 3.2 per cent in July, mainly due to a sharp uptick in refinery products and a slow rise in coal production. The index had grown 5.2 per cent in the previous month of June.

Data released by the commerce and industry ministry on Wednesday show growth in the eight — coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity — had a cumulative growth of  4.9 per cent in the five months up to July in the current financial year.

Comprising nearly 38 per cent of total industrial production, the sectors had a lower growth of 2.2 per cent in the same period of the previous year. While two sectors had double-digit growth in June, only refinery production did in July, of 13.7 per cent. Growth here had consistently risen since December 2015, before suddenly plummeting to a marginal 1.2 per cent rise in May.

After that, growth had picked up steam, rising 3.5 per cent in June. All other sectors rose marginally, other than coal production which rose 5.1 per cent, albeit far less than the 12 per cent rise in June. After consistently providing a major push to the index for most of the past financial year, fertiliser output rose at 2.5 per cent in July, after rising by 9.8 per cent in June.

Electricity generation rose marginally by 1.6 per cent in July, slowest in eight months. It had risen by 8.1 per cent in June.  

A sudden and large fall in growth rate was also seen for cement production, up only 1.4 per cent in July after 10.3 per cent in June. Steel output contracted for the first time since February, falling 0.5 per cent, after rising 2.4 per cent in June.

The opposite was in natural gas production, which had earlier grown in February, contracting since. In July, it rose 3.3 per cent. However, crude oil production continued to contract for a fifth month in July. The 1.8 per cent rate of fall was, however, milder than the 4.3 per cent fall June.

After rising to a 17-month high of 8.5 per cent in April due to rise in refinery products and electricity generation, core sector growth plunged to a five-month low of 2.8 per cent in May, after the sectors failed to sustain the momentum. The rise in June was on the back of robust growth in coal and cement.

The country’s total industrial growth had accelerated to an eight-month high in June, aided by production of electricity, mining, commercial vehicles and mobile phones. However, the possibility of mining activities slowing due to heavy rain, among other factors, might throw growth off-track in July.

“The deceleration in growth of core sector industries and aggregate automobile production, coupled with non-oil merchandise exports reverting to contraction after a gap of only two months, foretell an anaemic IIP (Index of Industrial Production) growth for July.” Nayar said.