Growth in the index of eight core industries slowed to three per cent in June compared to 4.4 per cent in May, underscoring the poor growth in economy as shown by the Index of Industrial Production data for May. The IIP in May had slowed to 2.7 per cent from 3.4 per cent in April.
The eight core industries — Coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity — comprise nearly 38 per cent of the weight of items included in the Index of Industrial Production (IIP).
Coal production increased by a robust 6.3 per cent in June 2015 over June 2014. But this was slower than the growth of 7.8 per cent seen in May. “The coal auctions earlier in the year appear to have a positive effect on the output as production grew by 6.3 per cent year-on-year despite a high base from last year,” said Rishi Shah, an economist with Deloitte.
* Coal production increases by 6.3 per cent year-on-year in June
* Crude oil production contracts by -0.6 per cent in June following poor growth of 0.8 per cent in May
* Refinery products continue to see robust growth
* Contraction in production of natural gas accelerates to -5.9 per cent in June
* Fertiliser sector sees strong growth in June — accelerating to 5.8 per cent from 1.3 per cent in May
Growth in steel and cement accelerated in June to 4.9 per cent and 2.6 per cent respectively. Growth rates for these two sectors stood at 2.6 per cent and 2.5 per cent in May. “Steel and cement continue to show positive levels of growth and this trend can be expected to be reinforced if the investment activity also picks up momentum in the coming months,” said Mr. Shah.
However, the electricity sector is still a cause for concern, as growth has been consistently slowing for several months. Growth in electricity production shrank drastically to just 0.2 per cent in June from 5.5 per cent in May. “Electricity growth has been slowing down over the past six months and indicates that power supply continues to be a constraining factor. Unless this and other supply side constraints are not tackled systematically, monetary policy interventions will not have the desired impact,” Mr. Shah said.
Crude oil production contracted by -0.6 per cent in June following poor growth in May of 0.8 per cent. However, data tabled by the Ministry of Petroleum and Natural Gas in Parliament shows that oil production in country for the period April-June 2015 has exceeded the target set for the period by 2.6 per cent. The data shows that crude oil production has consistently missed targets in 2012, 2013 and 2014.
Contraction in production of natural gas in the country accelerated to -5.9 per cent in June, from -3 per cent in May. The sector has been contracting every month since November 2010. The data tabled by the Ministry in Parliament shows that natural gas production in the country missed targets in 2012, 2013 and 2014, and continued to fall short even in April-June 2015.
In contrast, refinery products continued to see robust growth, of 7.5 per cent in June, marginally lower than the 7.8 per cent seen in May. Similarly, the fertiliser sector saw strong growth in June — accelerating to 5.8 per cent from 1.3 per cent in May.
