India’s core sector growth contracts 1.5 per cent in November 2019

Showing no signs of improvement, the output of eight core infrastructure industries contracted for the fourth consecutive month in November by 1.5 per cent, according to official data.

Since August, the eight core industries are recording negative growth.

The output of coal, crude oil, natural gas, steel, and electricity declined by 2.5 per cent, 6 per cent, 6.4 per cent, 3.7 per cent and 5.7 per cent respectively, according to the data. The eight core sectors had expanded by 3.3 per cent in November 2018.

The index of eight core sector industries contracted by 5.8 per cent on a year-on-year basis in October. This is the third consecutive monthly contraction after September, when the index shrank 5.1 per cent. Crop destruction due to excess rains in the past month adversely affected agricultural growth in the third quarter.

The growth rate of cement production dropped to 4.1 per cent from 8.8 per cent in November 2018.

The output of refinery products and fertilizers increased by 3.1 per cent and 13.6 per cent respectively in November 2019 over the year-ago month.

During the April-November period, core industries recorded flat growth (zero per cent) against 5.1 per cent in the year-ago period.

Commenting on the data, ICRA Ltd said: “We expect the Index of Industrial Production (IIP) to report a modest growth in November 2019 after having contracted since September 2019”.

These industries comprise 40.27 per cent of the weight of items included in the IIP.

While crude oil output remained in the negative since November 2018, natural gas production was in negative since April this year. Similarly, coal output was declining since July this year.

Meanwhile India’s GDP growth has also been falling consistently. This is the longest continuous deceleration in gross domestic product (GDP) growth, which has been slowing for six straight quarters. India’s economy is witnessing the slowest pace of expansion since March 2013, hurt by inadequate revival in consumption and stagnant investment, with only strong government spending preventing an even steeper slowdown. The latest numbers mark the longest continuous deceleration in gross domestic product (GDP) growth, which has been slowing for six straight quarters.

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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