Eight core industries data at 11-month high, output up 5.5% in Feb


                          
Eight core industries data at 11-month high, output up 5.5% in Feb

The Eight Core Industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP). The combined Index of Eight Core Industries stood at 132.9 in February 2020, which increased by 5.5% as compared to the index of February 2019. Its cumulative growth from April to February, 2019-20was 1%.

According to the Ministry of Commerce & Industry, Coal production also rose by 10.3% in February 2020. Its cumulative index declined by 1.2% during April to February 2019-20, over the corresponding period of the previous year.

Crude Oil production declined by 6.4% in February and its cumulative index declined by 6% during April to February 2019-20, over the corresponding period of the previous year.

Petroleum Refinery production has increased by 7.4% in February 2020 and its cumulative index increased by 0.3% from April to February 2019-20, over the corresponding period of the previous year.

Steel production declined by 0.4% in February, however, its cumulative index increased by 5% from April to February 2019-20, over the corresponding period of the previous year.

Cement production increased by 8.6% in February. Its cumulative index increased by1.8% during April to February 2019-20, over the corresponding period of the previous year.

Aditi Nayar, Principal Economist, ICRA Ltd, “as expected, core sector growth recorded a healthy uptick to an 11-month high 5.6% in February 2020 from the revised 1.4% in January 2020, driven by electricity, petroleum refinery products, cement and coal. However, this uptrend is likely to prove to be fleeting, with the lockdown in March 2020 affecting production in many sectors. “

The pace of growth of electricity generation improved substantially to 11% in February 2020 from 3.3% in January 2020, led by a pickup in thermal electricity generation (to +9.9% from +0.5%), as well as hydroelectricity generation (to +18.3% from +17.6%). However, the impact of social distancing and the lockdown is expected to sharply curtail the demand for electricity in the immediate term.

The healthy growth in core sector industries and turnaround in non-oil merchandise exports would support the industrial growth in February 2020, despite the deepening contraction in auto production. On balance, we expect industrial output to record an improved growth of 2.5% in February 2020, before slipping into a Covid-led contraction in March 2020.




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