New Delhi: Contraction in India’s eight major industries continued for the fourth consecutive month in November as the output pace receded by (-)1.5 percent.
However, the rate of contraction in November was slower than the sharp plunge of (-)5.8 percent registered in October.
On a year-on-year basis, the growth rate stood at 3.3 percent in November 2018.
The eight core industries include coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity.
As per the Index of Eight Core Industries, barring refinery products, fertilizers, and cement, all other sectors contracted in November.
The ECI comprises over 40 percent of the weight of items included in the Index of Industrial Production (IIP).
On a sector-specific basis, the refinery output, which has the highest weight of 28.03, rose by 3.1 percent in November compared to the same month of the previous financial year.
Nevertheless, electricity generation, which has the second-highest weight of 19.85, decreased by (-)5.7per cent.
Similarly, steel production, the third most important component with a weighting of 17.91, slipped by (-)3.7 percent during the month under review, whereas coal mining, with 10.33 weight, was down by (-)2.5 percent.
The extraction of crude oil, which has a weight of 8.98, declined by (-)6 percent in November. The sub-index for a natural gas output with a weight of 6.87 inched lower by (-)6.4 percent.
On the other hand, cement output, which has a weight of 5.37, grew by 4.1 percent, similarly, fertilizer production, which has the least weight of 2.62, increased 13.6 percent in November.
“As expected, the contraction in the output of the core industries narrowed significantly to 1.5 percent in November 2019, reflecting the sequential improvement in 5 of the 8 constituents, namely coal, electricity, cement, fertilizer, and refinery products,” ICRA Principal Economist Aditi Nayar said.
“While the narrowing in the pace of core sector contraction is encouraging, five of the eight core sectors recorded a YoY decline in November 2019, which paints a sobering picture of the underlying trends.”
According to Brickwork Ratings Chief Economic Advisor M.Govinda Rao: “Eight core sectors continued to contract for the fourth straight month signifying the underlying slowdown concerns and demand constraints.”
“The core sector growth contracted by 1.5 percent in November 2019 as against 3.3 percent growth reported in the corresponding month a year ago. However, there is some improvement in November 2019 as compared to the previous month’s all-time low of -5.8 percent.”
