In a grim prologue to the level of industrial and overall economic growth that can be expected during the fourth quarter of the current fiscal, the core sector put up a dismal show in January 2012, with its output expanding by a mere 0.5 per cent as compared to a healthy 6.4 per cent growth a year ago.
After a slight improvement in December 2011 with a growth of 3.1 per cent, the January data on the key infrastructure industries reveal clear signs of a slowdown, considering that the eight segments constitute the core of the manufacturing sector and account for a weight of 37.90 per cent in the IIP (index of industrial production).
Primarily responsible for the pull-down in core sector growth were finished steel and the three petroleum segments, namely, crude oil, petroleum refinery products and natural gas which witnessed marked contraction in growth. The other four segments — electricity, cement, coal and fertilizer — managed to stay in the positive territory.
As per the official data, while crude oil production contracted by 2 per cent in January this year as compared to a robust growth of 10.8 per cent in the same month of 2011, the worst performance was by the natural gas segment with its production contracting further by 8.9 per cent as compared to a negative growth of 6.3 per cent a year ago.
Keeping up with the negative trend was the petroleum refinery segment with an output contraction of 4.6 per cent as compared to a robust growth of 8.7 per cent while steel also witnessed a negative production growth of 2.9 per cent in January 2012 as against an expansion of 8.7 per cent in January last year.
The other four segments showed a positive growth trend. Coal output went up by 7.5 per cent from (-) 1.3 per cent year-on-year. Fertilizer output also rose, but at a lower pace of 4 per cent in January this year as compared to 5.9 per cent a year ago. Alongside, while cement output increased by 10.6 per cent as compared to a growth of 1.8 per cent, electricity generation barely managed to remain in positive zone with a growth of 2.4 per cent in January 2012 as compared to the 9.7 per cent rise seen last year.
As a consequence of the poor performance in January, the core sector's cumulative growth during the 10 months (April-January) of the current fiscal slipped to 4.1 per cent from 5.7 per cent in the same period of 2010-11.
Expressing concern over the dismal performance, FICCI Secretary-General Rajiv Kumar pointed to the core sector data as a signal of slowdown in the economy.
“The government must focus on strong and structural reform measures to prevent further deterioration,” he said.
