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July Industrial Output Growth Slows To 2.1% YoY

03 September 2019


New Delhi: The pace of production at India's eight major industries slowed in July to 2.1 per cent from 7.3 per cent in the year-ago month. However, the index of eight core industries in July was higher compared with June, when it rose by just 0.7 per cent.

The eight core industries, like coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity, comprise 40.27 per cent of the weight of items included in the index of industrial production (IIP).

According to the Ministry of Commerce & Industry, the cumulative growth in April-July of FY20 was 3 per cent compared with 5.9 per cent reported for the same period of the last financial year.

On a sector-specific basis, the refinery output, which has the highest weightage of 28.03, slipped by 0.9 per cent in July compared with the same month of the last financial year.

However, electricity generation, which has the second highest weightage of 19.85, increased by 4.2 per cent. Steel production, the third most important component with a weightage of 17.91, was up 6.6 per cent during the month under review, whereas coal mining, with a 10.33 weightage, was down by 1.4 per cent.

Extraction of crude oil, which has a weightage of 8.98, declined by 4.4 per cent during the month. The sub-index for natural gas output with a weightage of 6.87 inched lower 0.5 per cent.

Cement output, which has a weightage of 5.37, rose 7.9 per cent and fertiliser production, which has the least weightage of 2.62, increased 1.5 per cent in July.

"The core sector data offered mixed cues, with the moderately healthy growth of cement and steel output juxtaposed against YoY contraction in four indices, namely, coal, crude oil, natural gas and refinery output," said ICRA Principal Economist Aditi Nayar. 

"Based on the improved performance of the core sector and non-oil merchandise exports, ICRA expects industrial growth (IIP expected next week) to rise modestly in July, led by manufacturing, even as mining and electricity would record a sequential weakening," she said.