NEW DELHI: The eight core infrastructure sectors continued on their negative growth trend for the sixth month in a row in August, with the crucial segments contracting by 8.5 per cent during the month. The data only shows that the pace of economic recovery likely will be slow. The eight sectors remain an important gauge for the health of the overall economy since they account for nearly 40 per cent of the country’s overall factory output, which is in turn measured by the Index of Industrial Production.
“The combined Index of Eight Core Industries stood at 117.6 in August, 2020, which declined by 8.5 (provisional) per cent as compared to the Index of August, 2019,” the Centre said. Data released by the Commerce and Industry Ministry on Wednesday shows that the production of the eight core sectors had contracted 0.2 per cent in August 2019, while the figure had contracted by 8 per cent in July, 2020.
The data also showed that the drag in output was mainly on account of a decline in the production of steel, refinery products and cement. Barring coal, which returned to the position growth zone, at 3.6 per cent, and fertilizer sector, which showed some improvement at 7.3 per cent growth, all other sectors recorded a negative growth. Cement production contracted by 14.6 per cent during the month, crude oil by 6.3 per cent, natural gas by 9.5 per cent, refinery products by 19.1 per cent, steel by 6.3 per cent, and electricity by 2.7 per cent.
For the period between the months of April-August 2020-21, the eight core sectors’ output contracted by a record 17.8 per cent, mainly as the government revised the shrinkage in the core sector downward, from 9.6 per cent earlier to 8 per cent in July, while in May, it was revised to 21.4 per cent from 22 per cent earlier. According to Aditi Nayar, Principal Economist at ICRA, “The sharp dip in the contraction in refinery products imposed the chief drag on the performance of the core sector in August 2020, and served as a reminder that there may be intermittent setbacks before the economy fully recovers from the impact of the ongoing crisis”.
8.5%
contraction in core sector for Aug
14.6%
contraction in cement
19.1%
contraction in refinery products