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The deceleration rate in the production of India’s eight major industries continued in September even though the fall was contained at much lower levels than previous months, official data showed on Thursday.
As per the data, the Index of Eight Core Industries for September declined by 0.8 (provisional) percent as compared to September 2019.
Due to the Covid-19 related disruptions and lockdown, the core sector maintained a negative growth rate in double digits in each month of the April-June quarter with the fall in April being the sharpest at (-) 37.9 percent.
Though not comparable, the ECI index had slipped by (-) 5.1 percent in September 2019.
“Final growth rate of Index of Eight Core Industries for June 2020 is revised to (-) 12.4 percent.”
The Eight Core Industries comprise 40.27 percent of the weight of items included in the Index of Industrial Production (IIP).
These industries comprise coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity.
On a sector specific basis, the output of coal, which has a weight of 10.33 percent in the index, perform better than others showing an increase of 21.2 percent in September 2020 over the same month of previous year.
But, the output of refinery products, which has the highest weightage of 28.04, declined (-) 9.5 percent in September 2020 compared to the corresponding month of the last fiscal.
The extraction of crude oil, which has an 8.98 weightage, declined by (-) 6 percent during the month under consideration.
The sub-index for natural gas output, with a weightage of 6.88, declined by (-) 10.6 percent.
Cement production, which has a weightage of 5.37, slid by (-) 3.5 percent in the month under review.
Fertiliser manufacturing, which has the least weightage — only 2.63 — also declined by 0.3 percent.
“The core sector data reflects the fact that further economic contraction seems to have been arrested to a large extent, and that economic activity may pick up gradually. Coal, electricity and steel have displayed a positive bias, which augurs well for the broader economic objectives, and speedier economic recovery,” said Joseph Thomas, Head of Research, Emkay Wealth Management.
Nayar said that the disaggregated performance of the core industries was highly uneven, with sharp improvements in coal, refinery products and cement, amid a worsening in the performance of fertilisers and natural gas in September 2020.
“Encouragingly, coal, electricity as well as steel were able to post a YoY expansion in September 2020,” she said.
“The substantial improvement in the core sector performance in September 2020 was driven by the base effect-led uptick in coal production, related to heavy rainfall and labour issues in some mines in September 2019. Accordingly, the expansion in coal output is unlikely to sustain at this robust pace beyond the current month.”
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