NEW DELHI: India’s core sector output remained weak in July, with growth slowing to 2.1% from a year earlier, as production of coal , crude oil , natural gas and refinery products declined, the government said on Monday. While growth as recorded by the Index of Eight Core Industries was higher than an over four-year low of 0.2% in June, it was lower than 4.4% recorded in July 2018.The eight core industries of coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity , which have a 40.27% weight in the Index of Industrial Production, grew 3% in the April-July period compared with 5.9% in the year-ago period. Last week, official data showed India’s GDP expanded at 5% in the first quarter, the slowest pace in over six years.“There seems to be a slowdown which appears to be deep-rooted, particularly on the demand side. Coal, crude oil and petroleum are all linked to the demand side, particularly for automobiles and anything related to manufacturing,” said NR Bhanumurthy, professor at the National Institute of Public Finance and Policy.He added that the data indicated that the budget had not helped much in improving sentiment in July. Coal and crude oil output declined by 1.4% and 4.4%, respectively, in July from a year earlier, while natural gas and refinery product output fell by 0.5% and 0.9%, respectively. Cement output increased by 7.9% and steel production increased by 6.6%, the commerce and industry ministry said.“The core sector growth shows a continuous weakness in the month of July and factoring in the consumption demand in the first quarter, it is likely that the July IIP growth will be sluggish and continue to remain sluggish for the next few months,” said DK Pant, chief economist at India Ratings and Research.He said experts would now watch out for improvement in demand in the festive season and that the Reserve Bank of India may cut interest rates further.“Looking at the inflation trajectory, collapse of consumption demand, monetary policy is likely to do the heavy lifting,” said Pant.The RBI has already cut interest rates by 110 basis points this year. One basis point is one-hundredth of a percentage point. Bhanumurthy was sceptical about the impact of an interest rate cut.“When there is no demand, interest cuts would not help much. Fiscal policy should have been more active when the economy is slowing down and then monetary policy should have followed fiscal measures,” said Bhanumurthy. He said the government should focus on identifying stalled infrastructure projects and front-load capital expenditure on them and others that would have a multiplier effect on the economy. “The government should provide resources for capital expenditure even at the cost of slipping on the fiscal deficit target,” he said.