Lower crude oil production decelerates India’s April core sector growth

New Delhi: Lower production of crude oil and fertilizers decelerated the output pace of India’s eight major industries in April to 2.6 percent, official data showed on Friday.

According to the Ministry of Commerce and Industry data, the index of eight core industries had risen 4.7 percent in April 2018. On a sequential basis, the core sector grew by 4.9 in March this year.

The core sector index carries 40.27 percent weightage of the items included in the index of industrial production (IIP).

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“The combined Index of Eight Core Industries stood at 127.5 in April 2019, which was 2.6 percent higher as compared to the index of April 2018. Its cumulative growth from April to March 2018-19 was 4.3 percent,” the Ministry said in a statement.

On a sector-specific basis, the output of refinery products, which has the highest weightage of 28.03, grew 4.3 percent in April 2019 compared to the corresponding month of the last fiscal.

Electricity generation, which has the second highest weightage of 19.85, increased by 5.8 percent.

Steel production, the third most important component with a weightage of 17.91, was up by 1.5 percent during the month under review, whereas coal mining, with a 10.33 weightage , was higher by 2.8 percent.

On the other hand, extraction of crude oil, which has a weightage of 8.98, declined by (-) 6.9 per cent during the month under consideration.

The sub-index for natural gas output, with a weightage of 6.87, inched-lower by (-) 0.8 per cent.

Cement production, which has a weightage of 5.37, rose by 0.8 per cent in the month under review.

Fertiliser manufacturing, which has the least weightage of only 2.62, declined by (-) 4.4 per cent in April.

“Except electricity and to some extent refinery products and coal, all other segments of core sector have performed poorly in April 2019,” said Sunil Kumar Sinha, Director — Public Finance and Principal Economist India Ratings & Research (Fitch Group).

“The government capex spending is the key driver of growth for core infrastructure industries because private corporate investment is down and out. With new union government in place India Ratings (Ind-Ra) believes much of the future performance of these core infrastructure industries would depend on what is there in store for them in the full budget which is expected to be presented in the month of July 2019.”


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