CORE SECTOR GROWS 3.6% IN MAY

Core sector output rose 3.6 per cent in May, up from 2.8 per cent in April. The improving pace, counted yearon-year, was primarily led by the electricity sector, supported by oil refinery products and natural gas.

Data issued by the commerce and industry ministry on Friday also showed the eight core industries — coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity — had cumulative growth of 3.2 per cent in the first two months of the current financial year. This is less than half the 6.9 per cent growth in the corresponding period of 2016-17.

Contributing 40 per cent to total industrial production, core sector output had dipped in April mainly due to tepid growth across sectors, apart from steel, electricity and fertiliser. In May, electricity sector output had the highest growth rate, going up 6.4 per cent as compared to a 5.4 per cent rise the previous month. Refinery products were next highest at 5.4 per cent, reversing a trend of very low or negative growth over the earlier four months.

Natural gas production rose 4.5 per cent, up from a two per cent rise in April. However, crude oil production rose a paltry 0.7 per cent, after a 0.6 per cent contraction in April.

Coal production contracted, by 3.3 per cent, for a consecutive month. “The continued contraction is likely to reflect inventory management following the double-digit growth in March,” said Aditi Nayar, principal economist at ratings agency ICRA.

Also, after prolonged contraction in cement output for five months, the sector recorded modest growth in May, which might mean a nascent turnaround in construction activity. ICRA expects cement demand growth to recover to 4 to 5 per cent during 2017-18, driven by a pick-up in the housing and infrastructure segments, particularly roads and irrigation, Nayar said.