According to the latest numbers, the core sector saw terrific (5.5 per cent) growth in May. This could be a statistical aberration or a flash in the pan. But steel prices are rising and this could be the sign of genuine core sector demand.
It will be interesting to see if steel prices do maintain an upwards trend for say, the next two months. That would be a confirmation of sustainability. If steel is indeed in a situation of high demand, it is a given that downstream manufacturing will be doing well.
This should also show up in numbers like higher Q1/Q2 car sales and more new construction. Higher levels of activity can also be cross-checked by increasing offtake of cement, rubber, acid, because of more demand for batteries, tyres etc.
Core sector industries such as heavy construction, mining, steel, etc, are classified as cyclicals. However, the downtrend has lasted so long that one was afraid that these industries were in permanent decline. Basically, India had a huge core sector overcapacity situation by 1996-97 and GDP growth slackened after that.
One doesn
