Core sector industries grew at a meagre 1.9% in September, the slowest in eight months and much slower that the 9% in the same month last year.
Data released by the government on Friday showed that factors that pulled down industry were: declines in output of oil and gas and fertiliser industries and slow growth in coal, cement, steel and electricity sectors.
The latest data reflect persistence of the recent volatility in the data and retain the worry that the economy might yet be struggling to turn around. The eight core-sector industries tracked by the relevant index have a combined weightage of 38% in the index of industrial production. They grew 5.8% in August, 2.7% in July and 7.3% in June.
The weak data reflect the continuing sluggishness in the wider manufacturing sector and might force the Narendra Modi government to expedite critical reforms to attract investments.
The government is expected to push through legislative changes in the winter session of Parliament to streamline policies relating to land acquisition. More changes in labour laws and implementation of the goods and services tax (GST) are high on the government’s agenda. Data showed that crude oil, natural gas, refinery products and fertiliser output have registered a drop of 1.1%, 6.2%, 2.5% and 11.6%, respectively, in the month under review.
Expansion in other four sectors — coal, cement, steel and electricity — too slowed down to 7.2%, 3.2%, 4% and 3.8%, respectively, in September, against 13.6%, 12.1%, 10.7% and 12.9% increase in the corresponding month of the previous year, respectively.
The government has already paved the way for the introduction of commercial coal mining by the private sector by introducing an enabling provision in the Ordinance on coal blocks auction issued recently.
Increased imports of coal, coupled with a big decline in exports of iron ore, have created a wide trade deficit for mining sector.
The government has already stepped up monitoring of the capex plans of the central public sector enterprises for whom a combined capex target of R243 lakh crore has been set in the current year 2014-15. Together, CPSEs have cash reserves of R3 lakh crore. In the first six months of this fiscal, the eight core sectors grew by 4%, against 5% in the year-ago period.