India’s core sector growth moderates in February
9th April 2018
Powered by cement, the eight core sectors grew at 5.3% in February, holding out hope for healthy industrial output for the month.
Data released by the Commerce and Industry Ministry on Monday showed the eight core sectors spanning coal, steel, refinery products, cement, natural gas, crude oil, electricity and fertilizers grew an annual 5.3% in February, slower than the previous month’s 6.1%, but higher than the 0.6% posted in February 2017. Its cumulative growth during April to February, 2017-18, was 4.3%, shade slower than the 4.7% in the year earlier period.
Cement production increased by 22.9% in February, while the steel sector grew 5% during the month. The eight core sectors account for 40.8% of the Index of Industrial Production (IIP) and is a pointer to the performance of the factory output.
Crude oil and natural gas were the only laggard and contracted during the month, while coal and electricity sector displayed sluggish growth. Since September 2017, the sector has shown some signs of recovery growing in the 5 to 6% range.
“A favourable base effect underpinned the pickup in growth of cement output to a robust 22.9% and that of steel output to a moderate 5% in February 2018. Increased budgetary support for affordable housing, rural economy and infrastructure are expected to support cement demand in FY2019,” said Aditi Nayar, principal economist at ratings agency ICRA.
Nayar said she expects industrial growth to remain healthy at 6.5-7.0% in February 2018, boosted by the robust expansion of cement (22.9%), automobiles (27.3%) and refinery products (7.8%).