The bountiful monsoon season this year has reduced the cooling demand of the country and led to a fall in coal, crude oil, natural gas and other refinery product outputs, limiting the year-on-year growth to only 2%. As per the latest data released on Wednesday. The steel and cement sector is showing a positive growth driven by expansion in the construction sector activity. The core industries output expanded by 2.2% in June and only 1.6 in April-July, way less compared to the same time last year when the growth was at 6.3%.
Output of cement grew at 11.7% and steel has also expanded last month at 12.8%, as per the data of the commerce and industry ministry. Industries account for one-fourth of the GDP of the country, and 40% weight in the industry sector is based on the eight core sectors, including steel, coal, crude oil, natural gas, refinery products, fertilisers, cement, and electricity. Data released by the ministry also shows a contraction in crude oil production since January, while natural gas has declined since July last year. The refinery sector has also seen a small dip in July.
As per experts, the expansion in construction is due to central and state support. The rating agency Icra Ltd predicted India’s IIP growth at 1.5-2.5% for July, the official data for which will be released on 28th of August. The Bank of Baroda, in an analysis, has remarked that private investment has not yet picked up, which is leading to a tapering growth. The major push right now is from the government sector only. The reduction in output of crude oil, refinery products, and natural gas also shows a weak demand and stability in global prices.
The slow growth of the core sector is important to be analysed in the backdrop of the current focus policy policymakers to explore new avenues to accelerate India’s growth amidst global uncertainties and to push India from a developing economy to a developed one.
