Core sector index grows just 1.8% in July

NEW DELHI: The index of six core industries clocked 1.8% growth in July, lowest in the past five months, a statement by the commerce ministry on Wednesday showed. Index of the core industries had grown by 4% in the month before after contracting for four consecutive months.

Economists pointed out that the poor performance by the six core industries for the month of July suggests that the industrial production as measured by the index of industrial production (IIP) may not be able to match the 7.8% growth clocked in June. The index of six core industries has a combined weight of close to 27% in IIP.

Soumendra K Dash, chief economist at credit ratings agency CARE, pointed out that the emerging trend suggests that the core industry output will remain robust, but moderate. The poor show by the core industries was on account of decline in crude and refinery product production. Analysts attributed the sharp decline in petroleum refinery products to close to 40% decline in output from RIL���s refinery as the plant was shut down for 20 days for planned maintenance.

But a strong show by the cement and coal segment helped lift the gloom. ���Despite a high base, both cement and coal posted strong growth, up to 10.6% and 9.7% respectively. This could be attributed to the weak monsoon which resulted in a delay in maintenance shutdowns,��� said Citi economist Rohini Malkani, in a research note. Citi is expecting the IIP to clock close to 5% growth. Electricity generation and production of finished steel remained in positive
territory.