The country’s central sector has reached its lowest level in 20 months.
In June, there was a decline in the growth of eight infrastructure-related sectors. This is not a good sign for the country’s economy. In fact, due to the reduction in the production of crude oil and refinery products, the production growth of eight major industries slowed down to four percent in June this year. What is special is that this core sector has reached its lowest level in 20 months. This figure shows the growth of important sectors such as coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity in one month.
In June, the growth rate of these major industries decreased both year-on-year and month-on-month. The output of the core sector increased by 6.4 percent in May 2024, while in June 2023 the growth rate was 8.4 percent. It has been halved in June of this year. The previous low level of growth of key basic industries was recorded in October 2022 at 0.7 percent. These eight major sectors contribute 40.27 percent of the country’s Industrial Production Index (IPI). The IIP is an index to measure the overall industrial growth of the country.
How much growth in which sector?
Crude oil and refinery products output decreased by 2.6 percent and 1.5 percent respectively in June. Growth rates of natural gas, fertilizer, steel and cement output slowed to 3.3 percent, 2.4 percent, 2.7 percent and 1.9 percent respectively in the month under review. However, coal and electricity output registered growth of 14.8 percent and 7.7 percent respectively.
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What the experts say
Commenting on the figures, Aditi Nair, chief economist at rating agency Icra Limited, said that compared to May, the growth of basic industries fell to a 20-month low due to weakening or declining growth in five sectors, excluding coal, fertilizers and cement. Nair said that in view of the declining growth rate of basic sectors, the industrial production index is expected to rise by 3.5-5 per cent in June 2024.
