Eight core sectors of the economy registered a 5.2 per cent year-on-year growth in June due to higher electricity, coal and cement output, according to latest data.

In June 2015, these eight sectors — comprising about 38 per cent of the weight of items included in the Index of Industrial Production (IIP) — had risen by 3.1 per cent. The June number was higher than the 2.8 per cent in May 2016.

Data released on Monday by the Commerce and Industry Ministry showed that in June 2016, the growth in electricity generation with a weight of 10.32 per cent in the IIP — the maximum weight in the IIP among the eight core sectors — had soared to 8.1 per cent. It had risen by 14.7 per cent in April but dropped to 4.6 per cent in May. In June 2015, the sector had recorded only 1.2 per cent growth. Coal output in June rose 12 per cent, the highest since the 14.6 per cent in November 2014. Coal production had increased by 5.4 per cent in June 2015. Cement sector posted a 10.3 per cent growth in June, the highest since 11.89 per cent in March 2016. In June 2015, the sector had recorded growth of 2.9 per cent. Growth in the steel sector slowed to 2.4 per cent in June, the lowest since the (-) 0.5 per cent in February 2016. The output of the sector was 4.2 per cent in June 2015. Production in fertiliser sector increased from 5.8 per cent in June 2015 to 9.8 per cent in June 2016 but this was a decrease from 14.8 per cent in May 2016. On the other hand, refinery products’ output decreased from 7.5 per cent to 3.5 per cent year-on-year.

Crude oil and natural gas output continued to remain in the negative growth territory since March 2016. In June, the output of crude oil shrunk by 4.3 per cent while that of natural gas contracted by 4.5 per cent.

Fluctuating numbers

These eight core sectors grew 8.5 per cent in April and 2.8 per cent in May – the slowest since 2.9 per cent in January 2016. Their output had plunged to the negative growth territory in November 2015 when it shrank by 1.3 per cent.

“Cement and coal output will moderate as the monsoon has begun and this will reflect in the core sector growth number. Also, credit flow to core sector has become almost negligible, and, therefore, these numbers are unlikely to have a positive impact on the headline IIP numbers,” according to Soumya Kanti Ghosh, Chief Economic Advisor, State Bank of India.

Though the core sector grew by 8.5 per cent in April, the IIP for April shrunk 1.35 per cent. Similarly, in March, the sector posted a 6.4 per cent growth while IIP grew just 0.05 per cent. In May, the sector’s growth slowed to 2.8 per cent while IIP, surprisingly, rose to 1.2 per cent.

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