Core sector growth slows to 3.2% in October

Eight crucial infrastructure sectors grew 3.2 per cent in October, witnessing the same rate as in September. However, there are significant differences in the growth rate in each sector. While crude oil, steel and cement contracted in September, crude oil, natural gas, refinery, and steel declined in October.

"While the headline core sector growth was unchanged at 3.2 per cent, upon disaggregation, the core industries displayed a mixed trend. Four of the eight industries recorded a disappointing contraction in October 2015," said Aditi Nayar, senior economist at ICRA.

The core sector has almost 38 per cent weight in the index of industrial production (IIP). However, there is no one-to-one relationship between the core sector and IIP. For instance, core sector growth rose from 2.6 per cent in August to 3.2 per cent in September, but IIP growth fell from 6.2 per cent to 3.6 per cent over the same period.

While growth in construction fell to 2.6 per cent in the second quarter from 6.9 per cent in the first quarter, cement production rose 11.7 per cent in October against a fall of 1.5 per cent in September. This meant that construction might again witness a pick-up after the end of the monsoon season.

Elsewhere, electricity generation remained high even as its growth fell to 8.8 per cent in October from 10.8 per cent in September. Similarly, fertilisers' production also grew at a fast pace, though the rate moderated to 16.2 per cent from 18.1 per cent.

Coal production rose 6.3 per cent in October against 1.9 per cent in September. The cumulative growth rate in the April-October period of 2015-16 came in at 2.5 per cent, much lower than 5.6 per cent in the first seven months of FY15.