Refinery Products Push India”s Core Industries Output To 11-Month High


Healthy production of electricity and refinery products pushed the output pace of India”s eight major industries to an 11-month high of 5.5 per cent in February from a revised rise of 1.4 per cent reported for January 2020.

However, this uptrend is expected to be fleeting due to the lockdown in March 2020 affecting production across sectors.

This was also the fourth consecutive month of a rise for the Index of Eight Core Industries after three months of contraction.

Similarly, the Index showed that last month”s expansion was higher on a year-on-year basis from 2.2 per cent growth rate reported for February 2019.

The eight core industries include coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity.

As per the ECI, barring crude oil, natural gas, and steel, all other sectors expanded in February.

The ECI comprises over 40 per cent of the weight of items included in the Index of Industrial Production (IIP).

On a sector-specific basis, the refinery output, which has the highest weightage of 28.03, rose by 7.4 per cent in February compared to the same month of the previous financial year.

Electricity generation, which has the second-highest weightage of 19.85, increased by 11 per cent.

On the other hand, steel production, the third most important component with a weightage of 17.91, slipped by (-) 0.4 per cent during the month under review, whereas coal mining, with 10.33 weightage, was up 10.3 per cent.

Nonetheless, the extraction of crude oil, which has a weightage of 8.98, declined by (-) 6.4 per cent in Feb. The sub-index for natural gas output with a weightage of 6.87 receded by (-) 9.6 per cent.

Conversely, cement output, which has a weightage of 5.37, grew by 8.6 per cent, while fertiliser production, which has the least weightage of 2.62, increased by 2.9 per cent in Feb.

Aditi Nayar, Principal Economist at ICRA, said: “The healthy growth in core sector industries and turnaround in non-oil merchandise exports would support the industrial growth in February 2020, despite the deepening contraction in auto production.”

“On balance, we expect industrial output to record an improved growth of 2.5% in February 2020, before slipping into a Covid-led contraction in March 2020.”

With the inputs of IANS