New Delhi: Growth of eight core industries dropped to 0.2% in June, mainly due to contraction in oil-related sectors as well as cement production, according to official data. The government on Wednesday also revised downwards the growth rate of these eight sectors for May to 4.3% from the earlier estimate of 5.1%. The eight core sector industries -- coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity -- had expanded by 7.8% in June last year. These core industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).
Crude oil output, which has shown negative growth during the past one year, contracted by 6.8% in June, as per the data released by the Ministry of Commerce and Industry. The output of 'refinery products' too registered de-growth for the second month in a row. The contraction was 9.3% in June 2019 as against a growth of 12.1% in the year-ago period. The natural gas segment too posted a de-growth in June. Cement production, which was showing growth in the previous months, slipped into the negative zone. As per the data, the segment posted a contraction of 1.5% during the month under review.
However, steel and electricity production showed a growth of 6.9% and 7.3%, respectively. The fertilisers segment also posted a growth of 1.5% in June, reversing the de-growth registered in the previous two months. Expansion in coal production (3.2%) too was higher in June over the previous month, but was significantly lower than June 2018 when it stood at 11.5%. For the April-June period, the eight sectors grew by 3.5% as compared to 5.5% in the same period last year.
Commenting on the data, Aditi Nayar, Principal Economist with ICRA, said the marginal core sector growth, combined with the contraction in both auto production and non-oil merchandise exports, suggests that IIP growth would be muted at around 1% in June 2019. The IIP data would be released later this month. "Overall, there is limited visibility of a broad-based improvement in the Indian industrial outlook," she said.
