Core sector growth slows to 3 percent in June

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SME Times News Bureau | 01 Aug, 2015
A major index for select factory output slowed to three percent growth in June from an increase of 4.4 percent in the previous month due to a fall in crude oil and natural gas production.

The select factory output index rose by 8.7 percent in June, 2014.

The data on the select factory output was furnished by the commerce and industry ministry for the eight core industries (ECI).

ECI comprises 38 percent of the total weightage of items included in the Index of Industrial Production (IIP). It stood at 171.2 during last month from 178.6 in May and 166.2 in June, 2014.

The index's cumulative growth during April to June, 2015-16 stood at 2.4 percent from 2.1 percent during April to May, 2015-16.

The select factory output index had grown by 6 percent at April-June, 2014-15.

Electricity generation, commanding the highest weightage at 10.32 percent, inched up by 0.2 percent in June, 2015.

Steel production, the second most important component as per weightage, increased by 4.9 percent during last month.

Production of refinery products, the third most important component as per weightage of 5.93 percent, was higher by 7.5 percent last month.

However, crude oil, which has a 5.21 percent weightage in ECI, inched-lower by 0.7 percent during the month under review in comparison to the data for June, 2014.

Coal, with a 4.38 percent weightage, gained by 6.3 percent in June this year in comparison to the like month of last year.

Cement production, having a weightage of 2.41 percent, was up by 2.6 percent during the last month.

The sub-index for fertilisers which has a weightage of 1.25 percent rose by 5.8 percent.

However, production of natural gas, having a weightage of 1.71 percent, was lower by 5.9 percent in the month under consideration.

According to Devendra Kumar Pant, chief economist with India Ratings, the current core sector data showed affects of a strong positive base effect in June 2014.

"Importantly coal, fertiliser, steel and cement all have grown in June 2015 compared to May 2015. In sum, despite weak demand conditions 3 percent growth in core sector is encouraging," Pant added.