labels: Industry - general
Core sector growth slackens to 3.5 per cent in May news
09 July 2008

Mumbai: The growth in core sector production, comprising the six core industries of power, cement, coal, steel, crude oil and petroleum products, slipped to 3.5 per cent in May as against 7.8 per cent a year ago, according to official data released today.

Amidst continuing slowdown in overall industrial production, growth in core sector production, which contributes 26.7 per cent in the overall industrial production, declined to 3.5 per cent during first two months of the current fiscal from 6.9 per cent in the same period last year.

The index of core sector production growth, which grew 3.6 per cent in April this year, has been registering single digit growth for the past 13 months.

The core sector accounts for just over one-fourth of the index of industrial production (IIP).

Analysts estimate the country's overall industrial production growth in May to slow down further from an estimated 6.5 per cent to around 5.8 per cent. The Central Statistical Organisation will release the IIP data for May on Friday.

The May slowdown in the core sector output growth, which is attributed to lower output in four core sectors, comes in the backdrop of a 13 per cent increase in exports at $13.78 billion.

Coal production has been on a rise since February 2008 amidst a generally rising coal prices. Electricity generation has, however, not increased proportionately, due mainly to plant shut-downs as well as a dip in electricity demand due to the early onset of monsoons.

Steel and cement production grew at a lesser pace in May than in the same month last year. This may be attributed to a slowing of construction activity in the infrastructure and real estate segments during the month.

Crude oil production growth improved in May this year compared to the same month last year, mainly due to a 22 per cent rise in crude oil production by Oil India Ltd and a 2.7 per cent increase in production by the Oil and Natural Gas Commission.

Refinery production grew at a lower pace during May with production at public sector refiners down 5.6 per cent over the same month last year, petroleum ministry data showed.
 
The growth in power generation, with a weigh of 10.17 per cent in the index of industrial production (IIP), declined to 2 per cent in May this year as against 9.3 per cent in a year-ago period.

In April-May, the power sector witnessed growth of 1.7 per cent, compared to 9 per cent in the first two months last fiscal.

However, production of coal, finished steel and cement sectors registered a growth of 8.3 per cent, 5.2 per cent and 3.8 per cent, respectively, in May as against 0.5 per cent, 8.4 per cent and 9.9 per cent, respectively in the previous year.

The slowdown has been attributed to a rise in cost of raw material, borrowing costs and fall in demand from the construction and other sectors.


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Core sector growth slackens to 3.5 per cent in May