Core sector growth slows to 1.8% in Jan

Decline in output of crude oil, refinery products and electricity pulled down the growth of eight core sectors to 1.8 % in January, data released by the commerce and industry ministry showed Thursday.

The eight infrastructure sectors—coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity—had expanded 6.2% in January 2018 and 2.7% in December. The core sector has nearly 41% weight in the index of industrial production (IIP), suggesting a moderation in the industrial growth in January.

“Declining trend in core sector growth from October 2018 suggests continued weakness in industrial activities and a weak second half economic growth. Expect a low industrial growth in January 2019,” said Devendra Kumar Pant, chief economist at India Ratings. The core sector grew 4.5% between April 2018 and January 2019, compared with 4.1% in the same period of the previous fiscal.


Production of crude oil, refinery products and electricity contracted 4.3%, 2.6% and 0.4%, respectively, in January. Coal and cement output slowed 1.7% and 11% in January as against 3.8% and 19.6% in January 2018, respectively. “Lower electricity production is the surprise element with growth being negative. Low growth in coal is one of the reasons for the same,” said Madan Sabnavis, chief economist at CARE Ratings.

However, natural gas, fertilisers and steel output grew 6.2%, 10.5% and 8.2 % respectively in January. As per Sabnavis, higher fertiliser growth has come over a negative base effect last year. This can be attributed more to restocking to an extent as the main demand season for sowing is over.