Stock Market

July core sector growth down at 3.2%; coal, crude output declines

The eight core sectors of the economy registered 3.2 percent growth in July, mainly because of improvement in performance of energy sector, especially refinery output.

However, the growth rate of the eight infrastructure sectors — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — was slower than the 5.2 percent recorded in June.

The core sectors, which contribute 38 percent to the country’s total industrial production, had expanded by 1.3 percent in July last year.

As per the data released by the government, the cumulative growth of the sector during April-July period of the fiscal was 4.9 percent.

Refinery production expanded by 13.7 percent in July as against 2.9 percent in the year-ago month.

Coal output expanded by 5.1 percent. In July 2015, the segment had contracted by 0.1 percent.

Natural gas production witnessed a growth of 3.3 percent as against a decline of 4.4 percent in the same month of the last financial year.

The data revealed that steel sector contracted by 0.5 percent while cement production witnessed a growth of 1.4 percent in July.

Electricity generation slowed on annual basis.

Reacting to the news Samiran Chakraborty, the Chief Economist of Citibank, said the data was disappointing. “A part of the reason could have to do with monsoon. Last year it wasn’t great. This year it will be good.”

More importantly, he said cement and electricity were worrying. Talking about steel output which was also down, he said that import duty could have had an impact on production. Cement and electricity are causing more worry, he said.

Aditi Nayar of ICRA also highlighted how cement was a worrying factor. “Typically, there has been a quarter where cement sees double-digit growth and then it falls.”

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