Oct growth in 8 core sectors adds to worry

With all data pointing at a slowdown, there was one more to add to the dampening mood. Eight core industry sectors were close to a contraction point in October, by together growing at just 0.1 per cent.

These eight have a weight of 38 per cent in the Index of Industrial Production and would, hence, convey more pessimism. As many as five of the eight recorded negative growth, including coal, crude oil, natural gas, refinery products and fertiliser. Cement barely managed not to slip into negative growth, by remaining flat.

It was only steel and electricity that grew, and not robustly. Coal remained a cause of concern in October as well, as its output contracted nine per cent in October. It came on the top of a dismal 17.8 per cent negative growth in coal dispatches in September.

The fall in coal output would directly affect manufacturing and electricity. In fact, electricity generation, one of the few sectors to save the grace for GDP data in the second quarter, grew by just 4.9 per cent against a vigorous 8.8 per cent and 9.4 per cent in September and August, respectively.

“As coal output continues to decline, electricity numbers are also going to dry up soon,” cautioned Anis Chakravarty, director, Deloitte , Haskins and Sells.

Natural gas contracted 7.4 per cent in October, compared to growth of 6.5 per cent last year in the corresponding period. Crude oil recorded a 0.9 per cent decline in output as against 13.7 per cent growth last year. Steel, on the other hand, saw the output go up by 3.8 per cent, lower than the September number of 6.6 per cent. Last year, however, steel grew 13.4 per cent.