Refinery products decelerate February core industries' output

Lower production of refinery products slowed the pace of India's eight major industries' output in February, official data showed on Monday.

The Index of Eight Core Industries (ECI), which represent the output of major sectors like coal, steel, cement and electricity rose by 5.3 per cent last month compared to an increase of 6.1 per cent in January.

However, on an year-on-year basis, the ECI showed an uptrend. It had inched up by 0.6 per cent in the corresponding month of 2017.

"The combined Index of ECI stood at 123.1 in February 2018, which was 5.3 per cent higher as compared to the index of February 2017," said the Commerce & Industry Ministry.

"Its cumulative growth during April to February 2017-18 was 4.3 per cent."

The ECI index carries 40.27 per cent weightage of the Index of Industrial Production (IIP) which is the macro-gauge for India's factory output.

On a sector-specific basis, refinery products, which has the highest weightage of 28.03 per cent, grew by 7.8 per cent in February 2018 as compared with the corresponding month of the last fiscal.

Electricity generation, which has the second highest weightage of 19.85, picked-up by 4 per cent.

Steel production, the third most important component with weightage of 17.92, rose by 5 per cent during the month under review, whereas coal mining, with a 10.33 weightage, inched-up by 1.4 per cent.

On the other hand, extraction of crude oil, which has an 8.98 weightage, declined by (-)2.4 per cent during the month under consideration.

The sub-index for natural gas output, with a weightage of 6.88, went down by (-)1.5 per cent.

Cement production, which has a weightage of 5.37, edged higher by 22.9 per cent in February 2018.

Fertiliser manufacturing, which has the least weightage -- only 2.63 -- edged-up by 5.3 per cent during the month under review.

Aditi Nayar, Principal Economist, ICRA said: "Despite the favourable base effect for sectors such as cement and steel, the YoY growth of the core sector eased to 5.3 per cent in February 2018 from 6.1 per cent in January 2018, on account of the worsening performance of refinery products, electricity, coal, and natural gas."

"Nevertheless, cement and refinery products recorded a robust growth, even as the number of sectors recording a contraction eased to two in February 2018 from three in January 2018."

According to Devendra Kumar Pant, Chief Economist, India Ratings and Research, cement and refinery products provided support to core sector growth in February 2018.

"Solid cement and increasing steel sector growth suggests construction activities are gathering pace and positive for infrastructure sector. Strong core sector growth suggests a relatively stable February 2018 IIP growth," Pant said.

"While rising fuel prices may dampen refinery product demand and consumption a bit, strong vehicle sales will continue to drive consumption growth. Electricity growth is also likely to improve in coming months due to stable IIP growth and summer month demand."

--IANS

rv/vd