The core-sector output grew at 1.4%, the slowest pace in 16 months, in February, due to dips in production of finished steel, natural gas, crude oil and refinery items, underlining a concern over the pace of industrial recovery and causing analysts to predict that the last quarter GDP growth could be a bit less than 7.4% officially estimated.
The expansion of the eight core-sector industries, was subdued in January too at 1.8%.
The February growth in eight core-sector industries, which have a total weight of 38% in the index of industrial production, was the slowest after -0.1% growth reported in October 2013.
Tuesday’s data show steel output contracted 4.4% in February from a year earlier, after growing 1.6% in January. Crude output shrunk 1.9% in February, continuing the trend since November 2014. Natural gas, for long a laggard, and refinery products output declined 8.1% and 1.0% respectively in the month.
However, thanks to the measures taken by the government including the Fuel Supply Agreements between Coal India and its buyers, coal production jumped 11.6% in February as compared to 1.7% in January. Cement and electricity production increased by 2.7% and 5.2% respectively in February.
In April-February this year, the core sector output rose 3.8% lower than 4.2% in the same period in the previous fiscal year.
The latest data indicate that industry growth has not stabilized.
The government’s advance estimate for the GDP growth for FY15 is 7.4%. The economy grew by 6.5% in Q1, 8.2% in Q2 and 7.5% in Q3, which implies to meet the estimate for the full year, the growth in the last quarter should be 7.4%.