Jan core sector growth falls to a year's low

Plummets to 1.8% due to lower production of crude oil & natural gas

Annual growth in production of the eight key infrastructure industries declined to at least a year’s low of 1.8 per cent in January compared to 3.7 per cent in the same month last year.

This is likely to have a negative impact on the industrial growth numbers for the month, as these industries have a weight of 38 per cent in the Index of Industrial Production (IIP).

Growth in output of the eight core industries plummeted mainly on account of lower production of crude oil and natural gas, down 2.3 per cent and 6.6 per cent, respectively, according to data issued on Monday by the ministry of commerce and industry.

In the April 2014-January 2015 period, the first 10 months of the ongoing financial year, the eight core industries grew 4.1 per cent, against four per cent in the corresponding period of the earlier year.

Some sectors that did well were fertiliser, refinery products and electricity, growing 7.1 per cent, 4.7 per cent and 2.7 per cent, respectively. Production of steel grew 1.6 per cent in January.

“The sluggish performance of available lead indicators, such as the low growth of core industries and automobile production, as well as the contraction in merchandise export, foretell a muted outlook for IIP growth for January,” said Aditi Nayar, senior economist, ICRA.

She said production of steel indicated slight growth but any major improvement here could not be guaranteed, owing to demand and supply issues.

The rise in output of coal came down to 1.7 per cent in January from 7.5 per cent in December. That of cement reduced to 0.5 per cent, compared to 3.8 per cent in the previous month.

Cumulatively, the sector with the highest fall during April-January was natural gas, down 5.2 per cent. In 2013-14, the same sector had registered the biggest fall during the 10-month period, by 14 per cent.

The biggest growth during April-January was in electricity, by 8.9 per cent, followed by coal at 8.1 per cent and cement at 7.1 per cent.