Core sector growth up 3.2% in September; fastest in 4 months

Main number masks dismal segment-wise output; fertilisers, electricity see growth

Fertilisers and electricity were two beacons of hope among the eight core industries, which in September grew at a four-month-high rate of 3.2 per cent on a year-on-year basis, showed data released on Monday.

However, the main number hid the dismal growth registered by most of the six other  industries, three of which showed  a decline in output in September.

The growth rate in August as well as September, 2014 was 2.6 per cent. The September, 2015 growth rate, as such, might look magnified because of a low base of a year earlier.

In the first six months of the current financial year, the core industries’ production grew 2.3 per cent, a rate less than half the 5.1 per cent seen in the corresponding period of 2014-15.

Core sector industries account for almost 38 per cent of the Index of Industrial Production (IIP). The IIP numbers for September are due later this month.

Production in three key industries — crude oil, steel and cement — saw contraction in the month. By comparison, only one industry, steel, had seen production decline in August. Fertilisers continued to grow at the highest rate, registering an 18.1 per cent increase in September, against 12.59 per cent the previous month. Much of the increase, though, came on the back of a huge contraction of 12.6 per cent seen in September last year. The case was similar for the electricity sector, where generation rose 10.8 per cent, compared with 3.6 per cent in the same month a year ago.

Production of coal, natural gas and refinery products expanded 1.9 per cent, 0.9 per cent and 0.5 per cent, respectively.

Madan Sabnavis, chief economist at CARE Ratings, however, said the numbers did not show certain infrastructure growth. Pointing to the contracting figures for steel and cement, he said government spending on infrastructure had not picked up yet.

ICRA Senior Economist Aditi Nayar said: “The pick-up in core sector growth, in conjunction with an inventory build-up ahead of the festive season, should provide some sequential boost to output of manufactured goods, particularly consumer durables, in September 2015. However, a sharp contraction in non-oil merchandise exports in September might exert some pressure on IIP growth in that month.”