Core sector logs 6% growth in December

The six core sectors grew by 6 per cent in December which would further drive up industrial growth and make up for any loss of farm production to sustain the India growth story.

The six core sectors--crude oil, petroleum refinery products, coal, electricity, cement and finished steel--have a weight of over 25 per cent in the industrial production index and may well catapult it to 9 per cent growth this fiscal against just 7.6 per cent so far.

"It is an indication of further improvement in industrial performance that will contribute to industrial growth rising to about 9 per cent by the end of the current fiscal year," ICRIER Director and Chief Executive Rajiv Kumar said.

Finished steel and crude oil turned the table, expanding by 9.6 per cent and 1.1 per cent respectively, against 8 per cent and 0.3 per cent contraction last year.

Cement remained at top of the chart growing by a stunning 11 per cent, though it was less than 11.6 per cent in December, 2008.

However, oil production--both crude and refinery--and coal output remained sluggish, which may come in the way of economic activities.

All these six sectors expanded by just 0.7 per cent a year ago, when the economy came under the impact of the deepening global financial crisis.

For the first nine months of this fiscal, these sectors grew by 4.8 per cent compared to 3.2 per cent a year ago.

When these six industries grew by 5.3 per cent in November, industrial production expanded by more than 11 per cent. As such, in December IIP is expected to be quite high given these numbers and may compensate for any loss in GDP numbers due to expected fall in farm output.

Chief Statistician Pronab Sen had said yesterday, "As per the latest update, the farm production is likely to dip by 6-7 per cent during the third quarter."

The core sector data reveal maximum growth in cement at 11 per cent in December to 18.11 million tonnes, finished steel witnessing a growth of 9.6 per cent compared to 4.64 million tonnes in the year-ago period and electricity generation recording a growth of 5.4 per cent at 63,417 million kwh.

"This growth is because of base effect. But I think some momentum is picking up in the economy and also in the core sector," Crisil Principal Economist D K Joshi said.

Coal output, however, declined by 2.5 per cent at 48.79 million tonnes, while crude production expanded by a paltry 1.1 per cent at 2.9 million tonnes, and refinery output grew by a meagre 0.9 per cent at 12.6 million tonnes during the month under reporting.

"It is a welcome growth in steel and cement, recorded mainly due to spurt in construction and other activities. However, the decline in coal production is mainly due to the fact that no new coal deposits could be developed," Federation of Indian Mineral Industries Secretary General R K Sharma said.