Output from the eight core infrastructure industries grew at the fastest pace in 15 months, clocking a 5.7 per cent growth in February, driven by a robust growth in cement and fertilisers, according to official estimates released on Thursday.
Analysts said these core sector numbers bode well for overall industrial output to recover from three successive months of contraction, and register a 3 per cent to 4 per cent growth in February. The core sectors constitute around 38 per cent of the Index of Industrial Production (IIP).
“The core sector growth number for February is encouraging at 5.7 per cent with a fairly diversified picture across: steel, electricity, refinery products and fertilisers. This high growth should hopefully translate into an IIP growth rate of 3-4 per cent for February,” Madan Sabnavis, Chief Economist at Care Ratings said.
However, the numbers don’t point to a full-scale revival yet as a similar growth levels needs to be sustained in the next few months, he added. While production of fertilisers and cement posted a double-digit growth of 16.3 per cent (from fall in output by 0.4 per cent in February 2014) and 13.5 per cent (from 2.2 per cent), respectively, that of electricity rose to a five-month high of 9.2 per cent.
With this, the core sectors—coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity—saw a growth of 2.3 per cent in April-February 2015-16, lower than 5 per cent growth seen in the same period of the last financial year.
Among all core sector industries, only steel saw a fall in output in February, by 0.5 per cent, against a decline of 0.6 per cent in February last year. In January, the output of crude oil, natural gas and steel had declined.
Aditi Nayar, senior economist at rating agency ICRA said that the poor performance of the steel sector could be attributed to weak demand from end-users as well as availability of cheaper imports. “The sole slippage was seen in growth of coal output, which moderated to 3.9 per cent in February 2016 from a high 9.1 per cent in January 2016, likely on account of build-up of inventories,” she said.
