Core Sector Output Falls 5.2% Amid 'Severe' Economic Slowdown, Worst Show In 14 Years
The output of the core sector fell a record 5.2 per cent in September, with production by seven out of eight industries declining. In September 2018, it had risen 4.3 per cent, and 0.1 per cent in August 2019.
Data by the commerce and industry ministry showed that the production in coal, crude oil, natural gas, refinery products, steel, cement, and electricity declined in September.
Coal production fell by 20.5 per cent, crude oil by 5.4 per cent, and natural gas by 4.9 per cent. Refinery products by 6.7 per cent, cement by 2.1 per cent, steel by 0.3 per cent, and electricity by -3.7 per cent.
Barring fertilizers, where the output improved by 5.4% in September, the other seven infrastructure industries witnessed a contraction. Coal, which accounts for freight moved by the Indian Railways and the country’s power generation capacity, was the worst performer due to an extended monsoon.
The contraction of core infrastructure industries’ output which accounts for two-fifth of India’s factory output points at the industrial slowdown. Economists said contraction at this rate has not been witnessed in either the new series of the base year of 2011-12, or the previous one with 2004-05 as the base year.
“Such a low growth in core sector industries has not been witnessed so far in either the 2011-12 base or the 2004-05 base series. This clearly indicates the severity of the ongoing industrial slowdown,” Sunil Kumar Sinha, principal economist at India Ratings said.
The overwhelming contraction in the core sector reflects deep stagnation setting in, economists said.
The RBI cut its GDP growth forecast for the current fiscal to 6.1% from the previous estimate of 6.9% earlier this month, after the first-quarter economic growth slipped to 5%, a six year low.