Core sector shrinks eighth month in row, sharper sequentially in October

Contraction due to decline in production of crude oil, natural gas, refinery products and steel

Contracting for the eighth consecutive month, the output of the eight core infrastructure sectors dropped 2.5 per cent in October, mainly due to decline in production of crude oil, natural gas, refinery products, and steel.
 
The fall was sharper than September’s 0.1 per cent.
 
On the other hand, fertiliser, cement, and electricity recorded positive growth.
 
The production of eight core sectors had contracted 5.5 per cent in October 2019, revealed the data released by the commerce and industry ministry on Friday.
 
Between April and October, the sectors' output declined 13 per cent, compared to a growth of 0.3 per cent in the same period the previous year.
 
The output of crude oil, natural gas, refinery products, and steel declined 6.2 per cent, 8.6 per cent, 17 per cent, and 2.7 per cent, respectively. The growth rate in fertiliser production had declined 6.3 per cent in October, from 11.8 per cent in the same month last year.
 
On the other hand, coal, cement, and electricity output grew 11.6 per cent, 2.8 per cent, and 10.5 per cent, respectively, during the month under review.

 
The output of these eight key sectors has been in the negative territory since March.
 
Sunil Kumar Sinha, principal economist, India Ratings and Research, said the core sector data suggested industrial recovery was "still weak" and the traction seen in the index of industrial production (IIP) growth lately had largely been triggered by the festival demand.
 
IIP grew moderately by 0.2 per cent in September for the first time in the current fiscal year.
 
The eight core industries account for 40.27 per cent in the IIP.
 
Experts believed that the non-core portion of the IIP may perform better than the core sectors in October, led by the build-up of stocks ahead of the festival season.
 
Based on this, IIP might show a growth of up to 7 per cent in October.
 
However, growth in many sectors may moderate in November due to satiation of pent-up demand.