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Eight Core Industries’ Output Contracts 8.5% In August

Deccline was mainly seen in production of steel, refinery products and cement.

An employee welds armor-plating to the roof of a car at a factory in Jalandhar, Punjab, India. (Photographer: Anindito Mukherjee/Bloomberg)
An employee welds armor-plating to the roof of a car at a factory in Jalandhar, Punjab, India. (Photographer: Anindito Mukherjee/Bloomberg)

Contracting for the sixth consecutive month, the output of eight core infrastructure sectors dropped by 8.5% in August, mainly due to decline in production of steel, refinery products and cement.

The production of eight core sectors had contracted 0.2% in August 2019, showed data released by the Commerce and Industry Ministry on Wednesday.

Barring coal and fertiliser, all sectors -- crude oil, natural gas, refinery products, steel, cement and electricity -- recorded negative growth in August.

During April-August 2020-21, the sectors' output dipped by 17.8% as compared to a growth of 2.5% in the same period previous year.

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The rate of contraction in the eight key sectors has increased from July's -8%.

The output of steel, refinery products, cement, natural gas, crude oil and electricity declined by 6.3%, 19.1%, 14.6%, 9.5%, 6.3% and 2.7%, respectively.

On the other hand, coal and fertiliser sector production grew by 3.6% and 7.3%, respectively, during the month under review as against -8.6% and 2.9% rise in August 2019.

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Commenting on the numbers, ICRA Principal Economist Aditi Nayar said that based on these mixed trends, "we expect the contraction in the Index of Industrial Production to ease modestly to 6-8% in August 2020, from the initial 10.4% in July 2020".

The eight core industries accounts for 40.27% in the IIP.