New Delhi: Core sector growth slowed down to 3.5 percent in October against over 4 percent in the preceding month and around eight percent in August, as crude oil production continued to contract and steel as well as cement failed to show robust growth.
"I would have expected the overall growth to be a little
higher," Prime Minister's Economic Advisory Council Chairman C
Rangarajan said here.
Crude oil production declined by 2.2 percent at 2.85 MT
from 2.91 MT a year ago.
Core industry grew by just 3.5 percent in October
despite low base of two percent last year. It was in October
last year that the impact of deepening financial crisis was
felt on the domestic industry.
Not so impressive growth rate in core industries in
implies that industrial growth could be in single digit,
principal economist at Crisil DK Joshi said.
For the first seven months of this fiscal till October
core sector grew by 4.7 percent against 3.3 percent in the
year-ago period. Core sector contributes to over 26 percent
to the IIP.
However, some sectors like petroleum refinery, power
generation and coal production did not perform as badly. The
petroleum refining grew by 7.2 percent in October against 5
percent a year ago.
"The productive sectors, other than crude oil have shown a
rise. This is consistent with the forecast, we have for
manufacturing growth rate of 7.7 percent (this fiscal),"
Rangarajan said.
Petroleum refinery products grew by 7.2 percent at 13.26
MT compared to 12.37 MT, electricity generation grew by 4.7
percent at 65,246 million kwh compared to 62,338 million kwh
and coal production grew by five per cent at 42.49 MT from
40.45 MT.
"Increase in the domestic demand is visible," Commerce
and Industry Minister Anand Sharma said.
Finished steel and cement sector also did not perform
robustly.
Finished steel production was up by just 1.1 percent at
4.5 MT from 4.4 MT, while cement output rose by 5.3 percent
at little over 16 MT from 6.2 percent at 15.26 MT a year ago.
"Cement and steel are the cause of concern because of
their link with construction industry. Since the construction
industry has been doing fairly good, this could affect our
overall growth rate if production does not improve," HDFC Bank
chief economist Abheek Barua said.
PTI