NEW DELHI: The eight core industries as classified by the government contracted by 9.6 per cent in July for the fifth month in a row, albeit at a slower rate than earlier after the government continued to relax the lockdowns.
Except fertiliser, which grew at 6.9 per cent during July, all remaining sectors—coal, crude oil, natural gas, refinery products, steel, cement, and electricity—recorded contractions.
The output of steel, refinery products, cement, natural gas, coal, crude oil and electricity declined by 16.5 per cent, 13.9 per cent, 13.5 per cent, 10.2 per cent, 5.7 per cent, 4.9 per cent and 2.3 per cent respectively.
“The combined index of eight core industries stood at 119.9 in July 2020 which declined by 9.6 (provisional) per cent as compared to the index of July 2019. Its cumulative growth during April to July 2020-21 was minus 20.5 per cent,” said a statement from the Ministry of Commerce and Industry.
The production of eight core sectors had expanded by 2.6 per cent in July last year. The eight industries have a 40 per cent weight in the index of industrial production (IIP).
According to the government’s Chief Economic Advisor, KV Subramanian, despite the contraction, there are signs of visible recovery in the trend of industrial output numbers over the summer.
“Core sector growth, which had declined by 30 per cent in April, shows gradual improvement—22 per cent decline in May, 13 per cent in June and 9.6 per cent in July. The core sector is clearly showing a recovery,” the CEA added.And experts claim that going forward, there will be more easing sign in IIP numbers.
ICRA Ltd Principal Economist Aditi Nayar said “We expect the contraction in the Industrial Index of Production (IIP) to ease to 7-11 per cent in July 2020 from 16.6 per cent in June 2020”.