September eight core industries contracts for seventh consecutive month by 0.8%

With improved mobility of people and goods, the contraction in refinery products halved in September 2020, an encouraging trend that may continue in the immediate term, Aditi Nayar, Principal economist, ICRA said.

Oct 30, 2020 08:10 IST India Infoline News Service

Eight Core Industries
The contraction in the core sector industries narrowed sharply to a mild 0.8% in September 2020, after the stalling of the momentum that was seen in the previous month. With the shrinking of the contraction of the core sector output and the growth displayed by both auto production and non-oil exports, the IIP may well be able to eke out a small growth in September 2020.

The combined Index of Eight Core Industries stood at 119.7 in September 2020, which declined by 0.8% (provisional) as compared to the Index of September 2019. Its cumulative growth from April to September 2020-21 has been (-) 14.9%. Final growth rate of Index of Eight Core Industries for June’2020 is revised to (-) 12.4 %. The Eight Core Industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).

Accordingly, the expansion in coal output is unlikely to sustain at this robust pace beyond the current month. With improved mobility of people and goods, the contraction in refinery products halved in September 2020, an encouraging trend that may continue in the immediate term.
The further modest uptick in steel growth and sharp narrowing in the contraction of cement are favourable signs, pointing to the continued resumption of construction activities in the phased unlocking of the economy.

While many lead indicators have displayed signals of a strengthening economic recovery in September 2020, we caution that the sustainability of the upturn may not be universal, and await signs of its durability, Aditi Nayar, Principal Economist, ICRA said.

The summary of the Index of Eight Core Industries is given below:

Coal- Coal production (weight: 10.33per cent) increased by 21.2 per cent in September, 2020 over September,2019. Its cumulative index declined by 6.1per cent during April September, 2020-21over corresponding period of the previous year.

Crude Oil-Crude Oil production (weight: 8.98per cent) declined by 6.0 per cent in September 2020 over September 2019. Its cumulative index declined by 6.1 per cent during April September, 2020-21over the corresponding period of the previous year.

Natural Gas- The Natural Gas production (weight:6.88per cent) declinedby10.6 per cent in September 2020 over September 2019. Its cumulative index declined by 13.2 per cent during April to September 2020-21 over the corresponding period of the previous year.

Refinery Products- Petroleum Refinery production (weight: 28.04per cent) declined by9.5 per cent in September 2020 over September 2019. Its cumulative index declined by 16.3per cent from April to September, 2020-21over the corresponding period of the previous year.

Fertilizers-Fertilizers production (weight: 2.63 per cent) declined by 0.3 per cent in September 2020 over September 2019. Its cumulative index increased by 3.7 per cent during April September 2020-21 over the corresponding period of the previous year.

Steel-Steel production (weight: 17.92per cent)increased by 0.9 per cent in September 2020 over September 2019. Its cumulative index declined by 26.7per cent during April to September 2020-21 over the corresponding period of the previous year.

Cement-Cement production (weight:5.37per cent) declinedby3.5per cent in September, 2020 over September,2019. Its cumulative index declinedby25.1per cent from April to September, 2020-21over the corresponding period of the previous year.

Electricity- Electricity generation (weight:19.85per cent) increasedby3.7per cent in September,2020over September,2019. Its cumulative index declined by 8.2per cent from April to September, 2020-21over the corresponding period of the previous year.

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