Saturday, May 18, 2024

Core sectors expanded 6% in February

  

Output across India’s eight core sectors rose at a three-month-low pace of 6% in February, as growth eased from January’s revised estimate of 8.9%, which was the highest uptick in seven months.  

Fertiliser production continued to lead output growth with a 22.2% surge, while coal, steel and electricity production eased from double-digit growth in January to rise in the range of 7% to 8.5% during February. Cement production grew 7.3%, compared with January’s 4.6% expansion.  

Crude oil production dropped 4.9%, marking the ninth successive month of contraction and the sharpest drop in as many months. Natural Gas and refinery products’ growth moderated from about 5% in January to just over 3%.  

The overall Index of Core Industries, which constitutes about 40% of the Index of Industrial Production (IIP), dropped 7.8% sequentially in February from January’s levels, with all eight sectors recording lower numbers.  

The IIP, which had clocked a 5.2% uptick in January, is likely to see growth moderate to about 4.5% in February, according to Bank of Baroda chief economist Madan Sabnavis. The sharp growth in fertilisers production, he reasoned, was partly driven by companies stocking up depleted inventories, and was bolstered further by a low base effect in the year-earlier period when the segment had logged negative growth.  

Core sectors’ growth was likely to have moderated further in March, despite favourable base effects, due to unseasonal rainfall that had occurred in the month and would dampen coal output and electricity generation, cautioned ICRA chief economist Aditi Nayar.  

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