Low base, robust performance by coal, electricity sectors help boost growth

Core sector registered a year-on-year growth of 4.9% in August – the highest since the 5.2% reading in March this year — thanks to a low base and good performance by coal and electricity, according to data released on Tuesday by the commerce and industry ministry.

Core industries

The performance of eight core industries – which comprise 40.27 % of the weight of items included in the Index of Industrial Production (IIP) – in August 2017, was higher than 3.1% in August 2016 and 2.6% in July 2017. Its cumulative growth during April to August, 2017-18 was 3%. According to rating agency ICRA, “Given the favourable base effect and the expected rebuilding of inventories prior to the festive season, we expect the IIP growth to improve in August relative to the initial estimate of 1.2% for July 2017.”

Coal production recorded 15.3% in August 2017, up from a low base of (-) 9.7% contraction in growth in August 2016. Electricity output grew by 10.3% in August from a low base of 2.2% growth in August 2016.

Steel production registered a 3% growth in August, down from 16.7% in August 2016, while cement sector growth fell to (-)1.3% in August from 3.1% growth in August 2016. Fertilizer output also contracted by (-) 0.7% in August as against 2.5% growth in the same month a year ago. Natural gas registered a 4.2% growth in August this year from a low base of (-) 5.9% fall in August 2016, while refinery products output stayed almost at the same level with 2.4% growth this August as against 2.5% growth in August last year. Crude oil production shrunk by (-)1.6% in August from negative growth of (-)3.9% in 2016.