Core sectors keep negative growth trend in June

Except fertilisers, all the core sectors continued to record negative growth in June. However, the degrowth in all the eight core sectors was lesser than the previous two months of lockdown.

The growth rate of the index of eight core industries for June declined by

15 per cent compared to a dip of 22 per cent in May and 37 per cent in April. Its cumulative de-growth during April to June 202021 was 24.6 per cent. Among the core sectors, fertiliser production increased by 4.2 per cent in June 2020 over the same month last year. Its cumulative index too increased by 2.8 per cent during April to June, 2020-21 over the corresponding period of the previous year. Better monsoons and increased agricultural activity helped fertilizer production. Due to higher precipitation under southwest monsoon, kharif sowing was 45 per cent above last year’s level in the second week of July. Similarly, the sowing acreage also had gone up by 21 per cent. Increased labour participation also boosted farm activity.

However, all the other core sectors continued to de-grow in June. Among them, steel production declined by 33.8 per cent in June 2020 over the yearago month. For the AprilJune period, the decline was 51.7 per cent.

Subdued construction activity hit cement production by 11 per cent in June and 16.1 per cent in April-June quarter.

“Notably, steel stood out as the worst performing sector for the second month in a row, with a contraction in output of 34 per cent in June, in contrast to the modest degrowth in cement output. In our view, the differential performance of cement and steel suggest that construction activity has resumed at a faster pace in rural areas relative to urban areas, and that production of consumer durables continues to lag the recovery seen in other sectors,” said Aditi Nayar, principal economist, Icra.