India’s core sector output in May grows 16.8% year-on-year on low base




India’s eight core sectors grew 16.8 per cent year-on-year in May compared to April’s 60.9 per cent jump on account of a weak base the same period last year when factories shut due a nationwide lockdown for coronavirus.


The low base effect continued in May, as the core sector output, captured by the index of eight core industries (ICI), witnessed a 3.75 per cent fall sequentially.





During April-May, the core sector output grew 35.8 per cent as compared to the same period a year ago, data released by the commerce industry ministry showed Wednesday.


The eight sectors–coal, steel, cement, fertilizers, electricity, natural gas, refinery products, crude oil–comprise nearly two-fifths of India’s total industrial production. Barring fertilizers crude oil, the other sectors registered positive growth in May as compared to a year ago period.

Natural gas, refinery, steel, cement grew 20.1 per cent, 15.3 per cent, 59.3 per cent, 7.9 per cent, respectively, in May as compared to last year.


“If this is juxtaposed with other data like the fiscal numbers, it does appear that steel cement did get a fillip from government capex plans. Therefore, infra push could be one real reason for this increase,” said Madan Sabnavis, chief economist at CARE Ratings,.


However, on a sequential basis, steel, refinery products, cement, electricity crude oil witnessed contraction due to restrictions imposed by various state governments during the second wave of the pandemic.


“Even though construction activities were allowed amidst the state restrictions, the cement sector saw the largest sequential moderation in May 2021 (17.6), as well as the deepest pace of contraction relative to May 2019 (15.2%). This may reflect the impact of the second covid surge on rural demand, as well as the YoY decline in the Government of India’s capital outlay in May 2021,” said Aditi Nayar, chief economist at ICRA.


Experts said that factory output is expected to be in the range of 25-30 per cent in May. Factory output data for May will be released over the next two weeks.


“We can expect IIP (index of Industrial Production) growth to also be very impressive though not at the April level. It could be in the region of 20-30%. Core sector growth rates would be impressive in the coming months though will trend downwards,” Sabnavis said.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information commentary on developments that are of interest to you have wider political economic implications for the country the world. Your encouragement constant feedback on how to improve our offering have only made our resolve commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed updated with credible news, authoritative views incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better more relevant content. We believe in free, fair credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism subscribe to Business Standard.

Digital Editor



Source link