The eight core sectors of the economy registered 5.2 per cent year-on-year growth in June, thanks to a huge jump in output of electricity, coal and cement sectors.

Data released on Monday by the Commerce and Industry Ministry showed that in June, the growth in electricity generation with a weight of 10.32 per cent in the IIP — the maximum among the eight core sectors – had soared to 8.1 per cent. It had grown by 14.7 per cent in April, but then dropped to 4.6 per cent in May. In June 2015, the sector had recorded only a 1.2 per cent growth.

Coal output in June had risen by 12 per cent, the highest since 14.6 per cent in November 2014. Coal production had grown by 5.4 per cent in June 2015. Cement sector posted a 10.3 per cent growth in June, the highest since 11.89 per cent in March 2016. In June 2015, the sector had grown by 2.9 per cent.

Growth in steel sector dropped to 2.4 per cent in June, which was the lowest since (-) 0.5 per cent in February 2016. The output of the sector was 4.2 per cent in June 2015. Production in fertilizer sector increased from 5.8 per cent in June 2015 to 9.8 per cent in June 2016, but this was a fall from 14.8 per cent in May 2016.

On the other hand, refinery products’ output decreased from 7.5 per cent in June 2015 to 3.5 per cent in June 2016, but it was more than 1.2 per cent in May 2016.

Crude oil and natural gas output have continued to be in the negative growth territory since March 2016. In June, the output of crude oil shrunk by (-) 4.3 per cent, while that of natural gas contracted by (-) 4.5 per cent.

Fluctuations

These eight core sectors had recorded an 8.5 per cent growth in April, the highest since 8.54 per cent in November 2014. They then posted 2.8 per cent year-on-year growth in May — the slowest pace since 2.9 per cent in January 2016. The core sector output had plunged to the negative growth territory in November 2015 when it shrunk by (-) 1.3 per cent.

Soumya Kanti Ghosh, Chief Economic Advisor, State Bank of India, said: “Cement and coal output will moderate as the monsoon has begun. This will be reflected soon in the core sector growth numbers. Also, credit flow to core sector has become almost negligible and therefore these numbers are unlikely to have an impact on the headline IIP numbers.”

No correlations with IIP

Experts had been pointing out that it was becoming difficult to expect a one-to-one correspondence between core sector growth and overall IIP growth. Though the core sector grew by 8.5 per cent in April, the IIP for April shrunk (-) 1.35 per cent. Similar was the case in March when the core sector posted 6.4 per cent growth, while IIP recorded just 0.05 per cent growth. In May, core sector growth had slowed to 2.8 per cent, while IIP surprisingly rose to 1.2 per cent.