Core sector output shrinks 5.2 pc in Sept indicating severity of slowdown

Output of eight core infrastructure industries contracted by 5.2 per cent in September, the lowest in the decade, indicating the severity of economic slowdown.

As many as seven of eight core industries saw a contraction in output in September. Coal production fell steeply by 20.5 per cent, crude oil by 5.4 per cent, and natural gas by 4.9 per cent. Refinery products (-6.7 per cent), cement (- 2.1 per cent), steel (-0.3 per cent), and electricity (-3.7 per cent) output too declined.

The only infrastructure segment to post growth in September was fertilizers where production increased by 5.4 per cent year-on-year.

The eight core sectors had expanded by 4.3 per cent in September 2018, according to official data released on Thursday.

During the April-September period, the growth of core industries fell to 1.3 per cent against 5.5 per cent in the year-ago period.

Commenting on the data, India Ratings and Research, said that such low growth in core sector industries has not been witnessed so far in either 2011-12 base or 2004-05 base series.

"This clearly indicates the severity of the ongoing industrial slowdown," it said adding even on a cumulative basis, the performance is "dismal".

ICRA expects the Index of Industrial Production (IIP) to report a contraction of 2.5-3.5 per cent in September.

"In particular, the YoY decline in the output of coal, crude oil and natural gas, is likely to weigh upon the performance of the mining index of the IIP in September. Moreover, manufacturing may report a YoY contraction in September," it added.

Earlier this month, the RBI revised downwards its GDP growth forecast for the current fiscal to 6.1 per cent from the previous estimate of 6.9 per cent after the first-quarter economic growth slipped to over six-year low of 5 per cent.