The health of the core sectors of a nation determines its state of development. Amid struggles, India’s core sector production continued its upward trajectory for the fifth straight month in April’16. According to the latest data released by the government, the core sector index registered the highest growth of 8.5% since Nov’14. April registered +2.1% growth against 6.4% in Mar’16. The core sector growth had contracted 0.2% in April 2015. For the fiscal year ended 31 Mar’16, the cumulative growth of the index of eight core industries was 2.7%, the slowest since 2011-12. In the year before, the index had risen 4.5%.
Data showed five sectors reported growth last month: fertilizers (7.8%), steel (6.1%) and cement (4.4%) besides electricity and refinery products. Coal, crude oil and natural gas output, however, declined by 0.9%, 2.3% and 6.8%, respectively.
The eight core industries comprise nearly 38% of the weight of items included in the Index of Industrial Production (IIP). It should be noted that rise in core sector index does not directly translate into growth in IIP.
Coal production (weight: 4.38%) decreased by 0.9% in April 2016 over April 2015. Its cumulative index during April to March 2015-16 increased by 4.6% over corresponding period in previous year.
Crude Oil production (weight: 5.22%) decreased by 2.3% in April 2016 over April 2015. Its cumulative index during April to March 2015-16 decreased by 1.4% over the corresponding period of previous year.
Steel production (weight:6.68%) increased by 6.1% in April 2016 over April 2015. Its cumulative index during April to March 2015-16 declined by 1.4% over the corresponding period of previous year.
“Expecting a one-to-one correspondence between core sector growth and overall IIP growth is fraught with pitfalls as the data of March showed (when the core sector posted 6.4% growth while IIP recorded just 0.05% growth)”, said Sunil Kumar Sinha, Principal Economist, India Ratings and Research.
Source: Steel 360 Magazine June’16 Issue