Core sector growth slows down to 4-month low of 4.3pc in Sept

Growth of eight infrastructure sectors slowed down to 4.3 per cent in September, the lowest in the last four months, as production of crude oil and natural gas declined. Previously, the lowest growth rate was in May 2018 when the core sectors expanded at 4.1 per cent. Eight infrastructure sectors of coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity had grown by 4.7 per cent in September 2017.

The output of crude oil and natural gas dipped by 4.2 per cent and 1.8 per cent respectively in the month under review, according to the data released by the commerce and industry ministry on Wednesday. Fertiliser, cement and electricity output grew by 2.5 per cent, 11.8 per cent, and 8.2 per cent, respectively.

However, the growth of coal, refinery products, and steel sectors declined to 6.4 per cent, 2.5 per cent and 3.2 per cent respectively in September. During April-September 2018, the core sector growth was 5.5 per cent as against 3.2 per cent in the year-ago period.

These eight segments comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP).  Commenting on the data, industry body Assocham said that slowdown in core industry performance will have an impact on overall industrial production.

"The decline in core IIP could be the result of higher import tariffs and depreciating currency which is impacting production costs and leading to lower production," it said.

Economist with rating agency ICRA Aditi Nayar the decline in the core sector growth in September 2018 relative to the previous month was mild albeit broad-based, led by refinery products, cement, crude oil, natural gas and steel.

"In line with the previous month, two of the eight constituents recorded a YoY contraction in September 2018, which remains a cause for some concern," she said.