Core sector growth in July

http://www.thehindu.com/business/Industry/core-sector-growth-in-july/article5086368.ece?homepage=true

The growth rate of the core sector comprising eight infrastructure industries decelerated to 3.1 per cent in July this year when compared to a healthier 4.5 per cent in posted for the same month in 2012. The two sectors primarily responsible for the slowdown were crude oil and natural gas, both of which experienced a significant contraction in output.

However, the positive take on the numbers, as per the official data released here on Monday, is that the 3.1 per cent growth achieved by the infrastructure industries is way higher than the mere 0.1 per cent expansion posted for June 2013.

With the eight core industries – coal, crude oil, natural gas, petroleum refinery products, fertilisers, steel, cement and electricity – accounting for a share of 38 per cent in the overall basket of industrial production, the northward movement in growth may be seen as an indication of the slowdown bottoming out on a sequential basis.

The optimistic view, however, gets dented on a cumulative basis as the cumulative growth rate during the April-July period marks a slowdown to 1.9 per cent, a sharp deceleration from the 6.3 per cent witnessed during the same four-month period last year. For the entire 2012-13 fiscal year, the infrastructure industries posted a growth of 3.9 per cent as compared to five per cent in 2011-12.

According to the official data for July 2013, while crude oil and natural gas production contracted by 2.3 per cent and a whopping 16.1 per cent, respectively. Petroleum refinery output growth also decelerated to 5.1 per cent during the month as compared to an increase of 26 per cent in July 2012.

As for the other sectors, while steel production went up by seven per cent, cement output rose by a mere 0.8 per cent. The production growth of coal also slowed down to 1.2 per cent in July this year from two per cent in the same month of 2012, but electricity generation increased by 5.2 per cent as against a rise of 2.7 per cent a year ago. Fertiliser output also grew by 0.4 per cent during the month.