Core sector growth falls to 19-month low of 1.8 pc in Jan

Eight core industries grew at the slowest pace in 19 months in January as the production of crude oil, refinery products and electricity contracted, official data showed Thursday.

The infrastructure sectors expanded by 1.8 per cent in January 2019, the lowest growth rate since June 2017 when the core sector grew by 1 per cent.

The core sector had expanded at 6.2 per cent in January 2018. In December 2018, the growth was at 2.7 per cent on account of negative growth in crude oil, refinery products and fertilisers sectors.

Production of crude oil, refinery products and electricity contracted by 4.3 per cent, 2.6 per cent and 0.4 per cent, respectively, in January 2019.

India Ratings and Research said the electricity growth number of (-) 0.4 per cent is the lowest since February 2013.

The growth rate of coal and cement sectors slowed to 1.7 per cent and 11 per cent in January as against 3.8 per cent and 19.6 per cent, respectively, in the year-ago month.

However, natural gas, fertilisers and steel output grew by 6.2 per cent, 10.5 per cent and 8.2 per cent, respectively, in the month under review.

"Declining trend in core sector growth from October 2018 suggests continued weakness in industrial activities and a weak second half economic growth. Expect a low industrial growth in the month of January 2019," Devendra Kumar Pant, Chief Economist, India Ratings and Research said.

Sluggish infrastructure sector growth would impact the Index of Industrial Production (IIP) as these segments account for about 41 per cent of the total factory output.

According to the Commerce and Industry Ministry data, during April-January 2018-19, the eight sectors recorded a growth rate of 4.5 per cent against 4.1 per cent in the same period of the previous fiscal.