Mumbai: There is more bad news. The eight core industries in August recorded a 0.5 per cent decline in output of coal, crude oil, natural gas, cement, and electricity, according to a government data released on Monday.
The eight core sector industries — coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity - had expanded by 4.7 per cent in August last year.
Coal, crude oil, natural gas, cement and electricity recorded a negative growth of 8.6 per cent, 5.4 per cent , 3.9 per cent, 4.9 per cent and 2.9 per cent, respectively, in August, according to the data of the Commerce and Industry Ministry.
Commenting on the data, rating firm Icra Ltd said: "The performance of the core sectors in August 2019 was disappointingly weak, with a broad-based deterioration in six of the eight constituents and as many as five sectors recording a year-on-year contraction in that month".
The contraction in the core sector growth in August 2019 confirms the view that the modest pickup in the IIP growth in July did not signal the start of an industrial recovery, it added in a statement.
"This is first contraction in core infrastructure output since April 2019, suggesting the weak demand conditions. All eyes are now on festival demand to push industrial growth," said Devendra Kumar Pant, Chief Economist and Senior Director, Public Finance, India Ratings & Research (Fitch Group).
"The MPC will take note of weak demand, falling growth and low inflation in its monetary policy review on October 4, 2019. Ind-Ra expects a rate cut in October monetary policy review, however, the extent of cut could depend on the assessment of growth impact of policy measures announced by the government in past few weeks.
"The turnaround in refinery products, which is the largest constituent of the core sector, and a small uptick in the growth of fertilisers prevented a deeper contraction in the growth of the core sectors in August 2019.