The rebound in eight core industries’ production in November seems a blip in the third quarter of this financial year, as the output of crucial sectors with 38 per cent weight in industrial production, grew just 3.1 per cent, almost half of the earlier growth, both year-on-year and sequentially.
Analysts say December industrial production figures may not be as high as November, but still the GDP growth for the third quarter would be slightly better than the second quarter numbers.
It was negative growth in natural gas and crude oil in December, which muted the overall numbers against 6.3 per cent in the corresponding period of last year and 6.7 per cent in November. For the first nine months this year, production of eight core industry, which include coal, cement, steel, natural gas, petroleum refinery and fertilisers, grew 4.4 per cent versus 5.7 per cent in the corresponding period of last year.
Anyway, industrial production in December is expected to be muted due to the high base effect and also due to the recent lag of improvement in coal output. However, “We will see industrial production turn around pretty soon, conducive for RBI to go for a rate cut,” said Deloitte Haskins & Sells’ director, Anis Chakravarty.
Industrial production had contracted in October by 4.7 per cent, but rebounded by a 5.9 per cent growth in November.
Even then, economists expect the economy to do better in the third quarter in terms of overall GDP growth against just 6.9 per cent expansion in the second, a nine-quarter low.
Coal grew positively for the second straight month at a robust 5.6 per cent, pointing at major recovery which may also reflect in mining and manufacturing numbers with some lag. Coal had grown positively by 4.9 per cent in November after negative growth for three months; yet the mining numbers in the Index of Industrial Production was negative.
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Along with coal, robust growth in cement and electricity perked the eight core industry numbers. Cement output grew 13.3 per cent versus 16.6 per cent last month and electricity grew eight per cent against 14.4 per cent in November.
Crude oil output growth was negative at 5.6 per cent in December, just as in November. Natural gas production declined 10.8 per cent, down from 10.1 per cent in November. Crude oil production for December dipped 5.6 per cent to 3.17 million tonnes. Natural gas production declined 10.8 per cent for December to 3,915.3 million cubic metres, mainly due to a decline in the Reliance Industries-operated KG-D6 block.
Steel was a dampener, as after recording robust growth for several months, it grew just 2.2 per cent in December, down from the previous month’s 5.1 per cent.