The growth of eight major industries which contracted by 5.2 per cent in September, further shrank by 5.8 per cent in October.
India’s eight core industries in October continued to contract for the second straight month due to a steep decline in the cement, electricity, and other major sectors. Except refinery products and fertilisers, all the other major industries saw a slowing growth, according to the data released by the Ministry of Commerce and Industry. The growth of eight major industries which contracted by 5.2 per cent in September, further shrank by 5.8 per cent in October. The growth of these eight core industries reflect the industrial production as these comprise 40.27 per cent of the weight of items included in the IIP.
The present numbers of the growth of eight core industries now indicate a deeper slowdown in the index of industrial production in October. In the two months before October, the IIP contracted by 1.4 per cent and 4.3 per cent respectively. Manufacturing sector constitutes a major portion of the overall economy and it significantly pulls down the GDP growth rate if the sector does not perform well.
“The sharp worsening in the performance of electricity generation and cement in October 2019, offset the sequential improvements in refinery production, fertilisers and coal, resulting in an even deeper contraction of the core sector output in that month,” said Aditi Nayar, Principal Economist, ICRA.
Rainfall related bottlenecks to construction activities contributed to the YoY decline in output of cement and steel in October 2019. Focus on expediting infrastructure projects, measures to aid real estate developers and proposals to address the stress in the NBFC sector may support a pickup in construction activities in the coming months, she added.
Coal production declined by 17.6 per cent; crude oil declined by 5.1 per cent; natural gas production declined by 5.7 per cent; refinery products production increased by 0.4 per cent; fertilisers production increased by 11.8 per cent; steel production declined by 1.6 per cent; cement production declined by 7.7 per cent; and electricity generation declined by 12.4 per cent in October 2019.