India’s core sector growth improves to 4.7% in March 2019

The growth of eight core sectors improved marginally to 4.7 per cent in March 2019 against 4.5 per cent in the same month last year. This is the highest growth in five months, with impressive recoveries in the refinery products segment. Cement production, too, improved rapidly last month.

Data released by the Ministry of Commerce and Industry showed that the eight segments — coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity — witnessed growth recoveries in March after weakening for four-straight months. In February, the core sector growth stood at 2.2 per cent. For the full 2018-19 fiscal, the expansion rate of eight infrastructure sectors remained flat at 4.3 per cent, official data showed.

Coal generation growth was flat at 9.1 per cent in March 2019. Natural gas, refinery products, fertiliser, steel and cement sectors recorded positive growth rates.

Crude oil production, however, contracted by 6.2 per cent in March. Electricity generation declined by 1.4 per cent during the month under review.

Refinery products, which command almost 30 per cent of the core sector index, rose by 4.3 per cent in March, breaking a contractionary spell that had gripped the sector since December 2018. A fall in production of crude oil and refinery products had dragged the growth of the eight core sectors to 2.1 per cent in February.

The infrastructure sector growth will also have an impact on the Index of Industrial Production (IIP) as these segments account for about 41 per cent of the total factory output.

Having the second-largest weightage in the core sector index, growth in the electricity sector had decelerated to 0.8 per cent in January, the slowest in 71 months. Economists had blamed poor growth in coal output for this. Fertiliser production growth gained pace in March, rising 4.3 per cent, up from 2.5 per cent in February. Growth in the sector had bounced back in January, registering a 10.5 per cent rise, after three successive months of fall. Higher fertiliser output growth has come over a negative base effect last year. This can be attributed to restocking to an extent as the main demand season for sowing is completed, economists said.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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