Core Sector Growth Slows to 2.1 Percent in August

Bangalore: Declining output of crude oil, fertilisers and cement pulled down the growth rate of eight key sectors of the industry to 2.1 per cent in August from 3.8 a year ago, indicating persistent sluggishness in the economy. The cumulative expansion of these industries in April-August 2012 slowed to 2.8 per cent from 5.5 per cent in the same period last year, according to official data released here today. "The moderation in growth was on account of the negative growth in the production of natural gas, cement, fertilisers and crude oil, besides a decline in the growth rates of steel and electricity production," it said. The eight industries include crude oil, petroleum refinery products, coal, electricity, cement and finished steel and have a weight of 37.9 per cent in the overall Index of Industrial Production (IIP). Economists said the poor performance of the eight key industries reflects economic slowdown. These numbers would impact industrial production data for August to be released next month. "The core sector numbers are bad. It will have its effect on IIP as well," Principal Economist D K Joshi said. Natural gas and crude oil production contracted by (-) 13.5 per cent and (-) 0.6 per cent, respectively in August. Fertiliser and cement output also shrunk by (-) 2.1 per cent and (-) 2.4 per cent during the month under review. Steel and electricity production slowed to 1.8 per cent and 1.7 per cent, respectively. In the comparable month, it was 7.9 per cent and 9.4 per cent in that order. However coal and petroleum refinery output grew by 11 per cent and 8.4 per cent in August, against (-) 15.2 per cent and 3.8 per cent respectively. The eight core sector industries have a weight of 37.9 per cent in the overall Index of Industrial Production (IIP). The growth in core sector industries in May, June and July, too, had moderated to 4 per cent, 3.6 per cent and 1.8 per cent. Poor showing by the manufacturing sector had pulled down the GDP growth to 5.5 per cent in the first quarter of this fiscal, the decade's worst Q1 performance.