February core sector growth at 11-month high

New Delhi: Buoyed by a rise in the output of coal, cement and electricity, India's eight infrastructure industries grew at an 11-month high in February, although the recovery is unlikely to be sustained because of the disruption caused by Covid-19.

The Index of Eight Core Industries rose 5.5% in February, data released by the government showed on Tuesday. The growth estimate for January was revised to 1.4% from 2.2% assessed earlier. Growth for the April-February was at 1%, sharply lower than 4.2% in the same period a year earlier. The eight core infrastructure industries in the index are coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity.

“The healthy growth in core sector industries and turnaround in non-oil merchandise exports would support the industrial growth in February despite the deepening contraction in auto production,” said Aditi Nayar, principal economist at ICRA. “We expect industrial output to record an improved growth of 2.5% in February, before slipping into a Covid-led contraction in March,” said Nayar.

The statistics office will release factory output numbers for February on April 9. Output of coal, refinery products and electricity grew 10.3%, 7.4% and 11%, respectively. Refinery production was aided by export demand and a negative base effect. Cement production rose 8.6%, reflecting higher construction activity. Fertiliser production was up 2.9%. Crude oil, natural gas, and steel output contracted in February.

LOCKDOWN IMPACT
CARE Ratings’ chief economist Madan Sabnavis said: “This picture is likely to get reversed in March when several industries like construction, refinery products, overall industry and hence power would be partly affected by the lockdown.” Industrial production growth may be in the 3-4% range, he said.