The output of eight core sectors of the Indian industry – coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity – declined by 5.2% in September, data released by the Ministry of Commerce and Industry showed on Thursday. These eight core sectors had expanded by 4.3% in the corresponding month last year, PTI reported.
The eight sectors have 40.27% of the weight of all sectors that figure in the monthly Index of Industrial Production data, which will be released next week.
This is the worst decline in 14 years for the month of September, BloombergQuint reported. “Such a low growth in core sector industries has not been witnessed so far in either 2011-’12 base or 2004-’05 base year series,” Sunil Kumar Sinha, economist at India Ratings and Research, said. “This clearly indicates the severity of the ongoing industrial slowdown.”
Coal output contracted by 20.5% in September compared to a contraction of 8.6% in August, crude oil declined by 5.4%, natural gas by 4.9%, steel by 0.3%, cement by 2.1% and electricity declined by 3.7%, the government said. Refinery products, which have the highest weightage in the core sector index, contracted by 6.7% in September compared to growth of 2.6% in August. Among these, the production of fertiliser was the only component to register growth at 5.4% as against growth of 2.9% in August.
The Indian economy has seen a consistent decline in growth in recent months. The economic growth rate slipped to a six-year low of 5% in the April-June quarter – the fourth straight quarter of slowdown. The country lost the tag of the fastest growing major economy to China in the last quarter of 2018-’19 after its Gross Domestic Product growth rate declined to 5.8%.
Earlier this month, the International Monetary Fund lowered India’s projected growth in the current financial year to 6.1% but said it would rebound to 7% in the 2020-’21 financial year. On October 26, during a visit to New Delhi, World Bank Group President David Malpass called for more reforms and innovation to improve India’s growth rate. The world body’s Chief Economist Gita Gopinath said on October 20 that the organisation was “less optimistic” about the country’s economy than it was a few months ago.
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