Core Sector Output Shrinks 5.2% in September, Lowest in a Decade

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(Photo: Reuters)

Output of eight core infrastructure industries contracted by 5.2 percent 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 percent, crude oil by 5.4 percent, and natural gas by 4.9 percent. Refinery products (-6.7 percent), cement (- 2.1 percent), steel (-0.3 percent), and electricity (-3.7 percent) output too declined.

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

The eight core sectors had expanded by 4.3 percent in September 2018, according to official data released on Thursday, 31 October.

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

‘Even on Cumulative Basis, Performance Is Dismal’

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 percent from the previous estimate of 6.9 percent after the first-quarter economic growth slipped to over six-year low of 5 percent.