Core sector gains pace, clocks 6.7% growth rate

Core Sector
Riding high on the back of an increased production of refinery products, coal and cement, country's infrastructure sector growth has gathered pace and recorded 6.7 percent growth rate in June this year. Other core infrastructure sectors with higher production include steel, electricity and fertilizers. The two sectors, where production fell are crude oil and natural gas as in May, growth in the eight core infrastructure industries had slowed down to a 10-month low of 3.6 percent, while in the previous month growth of the core sectors was 4.6 percent. Low base effect has worked this month as June was the period just before GST set in (last fiscal). These growth rates have to sustain in the coming months when the base effect will turn adverse as companies started the process of restocking following GST, said, chief economist, Care Ratings, Madan Sabnavis. The eight core industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP) and the higher number this month may reflect positively on the IIP figures as well. IIP growth could be above 5 percent in June 2018, he added.

In the April-June 2018-19 period, core sector production increased by 5.2 percent over the corresponding period of previous year. Petroleum refinery production (weight of 28.04%) increased by 12% in June, 2018 over June, 2017. Cumulatively, production increased by 6.6 percent in the April-June, 2018-19 over the corresponding period of previous year. Coal production (weight of 10.33%) increased by 11.5% in June, while in the first quarter of the fiscal, its production increased by 13.2% compared to the April-June period of the previous fiscal. Cement production (weight of 5.37 percent) increased by 13.2% in June. Its cumulative index increased by 14.2% during April-June, 2018-19 over the corresponding period of previous year. Electricity generation and steel production, both accounting for a total weight of over 37%, grew 4 percent and 4.4 percent, respectively, in June. In the first quarter of the fiscal, electricity generation and steel production increased 3.4 percent and 2.9 percent, respectively.
Published on 01 August 2018
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