The Telegraph
Thursday , May 1 , 2014
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March core growth slows

New Delhi, April 30: The core sector grew 2.5 per cent in March against 4.5 per cent in the previous month because of a contraction in the production of crude oil, natural gas and fertilisers.

In 2013-14, growth slowed to 2.6 per cent from 6.5 per cent in 2012-13, according to data released by the commerce and industry ministry.

The eight core industries — fertilisers, cement, steel, electricity, crude oil, coal, petroleum refinery products and natural gas — have a combined weight of about 38 per cent in the index of industrial production (IIP).

“The slack core sector growth in conjunction with the decline in merchandise exports in year-on-year terms point towards a likely industrial contraction in 2013-14. Notwithstanding healthy reservoir levels at present, the possibility of sub-par monsoon rainfall would act as a dampener on hydro-electricity generation and core sector growth in the current fiscal,” Aditi Nayar, senior economist with rating agency Icra, said.

She said natural gas output was likely to remain sluggish in the near term.

The performance of domestic coal mining would affect core growth to a large extent in this fiscal, especially because of its impact on the PLFs (plant load factor) of various thermal power plants. PLF is a measure of the average capacity utilisation.

In March, crude oil output fell 1.6 per cent. The production of natural gas declined 9.3 per cent, while fertiliser output slipped 6.1 per cent.

Growth in the production of coal fell 0.7 per cent from 1.7 per cent in March 2013. Expansion in petroleum refinery products slowed to 2.8 per cent from 24.3 per cent a year ago, while steel output stood at 5.4 per cent against 11.6 per cent in the same period last year.

Cement output has remained unchanged. Only electricity generation increased to 5.4 per cent from 3.5 per cent in March 2013.

In January and February, the eight sectors had grown 1.6 per cent and 4.5 per cent, respectively.

Industrial output had contracted to a nine-month low of 1.9 per cent in February, after showing some feeble signs of recovery a month earlier, because of poor performance of the manufacturing sector.

For April-February 2014, factory output contracted 0.1 per cent compared with a 0.9 per cent growth in same period of the previous year, according to the Central Statistics Office.