In what could raise questions over the recent GDP figures highlighting a 7.1% increase in manufacturing activity in 2014-15, the output of eight core industries contracted by 0.4% in April. This was mainly due to poor performance of electricity, cement, refinery products and fertiliser sectors.
The latest data came a day ahead of the Reserve Bank of India’s scheduled monetary policy review, where the central bank is widely expected to lower the rates to boost investments and infrastructure growth.
Core industries contracted by 0.1% in March 2015. It had grown by 5.7% a year ago. Coal and steel were only two sectors that saw some growth, while crude oil and natural gas recorded lower output in April.
The cumulative growth of eight core industries in 2014-15 stood at 3.5% against 4.2% in the previous fiscal.
The sectoral performance is likely to reflect a fall in industrial output for 2015, since the eight sectors contribute 38% to the overall industrial production data. “The core sector performance has come in contrast to the GDP figures and the PMI data, which talk of some increasing activity in the manufacturing sector. But the poor performance of core data will definitely pull down the IIP figures which are yet to come,” said DK Joshi, chief economist at CRISIL.
The fall in April production was led by natural gas (down 3.6%), crude oil (down 2.7%), cement (down 2.4%), refinery products (down 2.9%), electricity (down 1.1%) and fertiliser (down 0.04%). Even the growth in steel output slowed down to 0.6% in April against 6.9% a year ago. Coal production grew by 7.9% during the first month of 2015-16.