Broader recovery? Eight core industries grow by 5.8% in Aug
NEW DELHI: India’s eight infrastructure industries—commonly referred to as the ‘core sector’ — grew 5.8% in August, from 2.7% in July 2014 and 4.7% in August last year, indicating that these could be signs of a broader recovery.
The data came on a day when Crisil, a Mumbai-based subsidiary of ratings firm Standard and Poor’s (S&P), published a report stating that the Narendra Modiled government has taken steps to gradually repair the economy, provide it with a mild boost during the rest of this fiscal year, and prepare it for higher growth.
“Domestic constraints, such as policy logjam in mining, delays in approving projects, and tardy implementation of cleared projects, were the major reasons behind India’s economic slowdown in the past three years,” said Dharmakirti Joshi, chief economist, Crisil. “Passing major reforms will test the new government’s statecraft.”
The infrastructure industries, which include electricity, coal, crude oil, steel, cement, fertiliser and refinery products, carry a weight of about 38% in the Index of Industrial Production (IIP) — a metric to measure output across factories in India.
The sectors of coal, cement and electricity grew by 13.4%, 10.3 % and 12.6%, respectively, during the month under review, according to the data released by thecommerce and industry ministry.
Steel production expanded 9.1% in August this year as against 8.1% in August 2013.
However, production of crude oil and natural gas declined by 4.9% and 8.3% respectively. Refinery products and fertiliser sectors too recorded negative growth of 4.3% and 4.3% respectively.
During April-August, the eight sectors grew by 4.4%, against 4.2% in the year-ago period.
India’s industrial output growth had decelerated to 0.5% in July, its slowest pace in four months, but August’s core sector data showed that a turnaround could be expected.