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Nine-month high core growth offers hope

New Delhi, July 31: Core sector growth hit a nine-month high of 7.3 per cent in June against 2.3 per cent in the previous month, led by a surge in cement, coal and electricity output.

During the April-June period, the growth of eight core industries stood at 4.6 per cent compared with 3.7 per cent in 2013. The sector had expanded 1.2 per cent in June last year.

The sector, which comprises coal, crude oil, refining, natural gas, steel, cement, electricity and fertilisers, accounts for 37.9 per cent of India’s industrial output.

“Double-digit growth in merchandise exports and auto production, in conjunction with the sharp improvement in core sector growth suggest that the growth of industrial production in June could be as high as 5-6 per cent,” Aditi Nayar, senior economist with rating agency ICRA, said.

Industrial output had expanded 4.7 per cent in May, the highest in 19 months.

Nayar said coal output improved sharply in June because of conducive weather conditions, which gave a thrust to power generation.

However, reports of critical coal stocks at various thermal power plants in July suggest that the high growth of the previous month may not have continued.

Dryer-than-normal conditions in June extended the window for construction activity, which resulted in a sharp improvement in the growth of cement production from the healthy level seen in April-May 2014.

 
 
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