ECONOMYJune core sector growth slows as base effect wanes

June core sector growth slows as base effect wanes



Core sector output grew 8.9% in June, easing from double-digit increases in the previous three months as the favourable base effect dissipated. The rise in the index of eight core sector industries in June was still heavily influenced by the base effect of 12.4% contraction in June last year, helping mask the weakness in the recovery.

The index was up 1.1% in June over May but down from levels obtained before the second pandemic wave in April 2021 and 4.7% lower than that in June 2019, indicating key infrastructure sectors are yet to recover to pre-Covid levels.

However, high-frequency indicators such as e-way bills and automobile production suggest a pickup in economic recovery in July that could yield real growth and not just a statistical, base-effect bounce.

Mobility has improved, too, with the continued easing of curbs by states.

“Continued unlocking by the states, improved mobility and higher electricity demand, pushed up in part by the lull in rainfall, are expected to boost the core sector growth to 11-14% in July 2021,” said

chief economist Aditi Nayar.


Eight infrastructure industries – crude, natural gas, coal, petroleum refinery products, fertilisers, steel, cement and electricity – make up the core sector index and together have 40.27% weight in the Index of Industrial Production (IIP). Production in five sectors — crude oil, natural gas, fertiliser, steel, and electricity – in June was higher than pre-Covid levels in February 2020.

It’s still too early to say anything about the sustainability of core sector recovery, said Sunil Kumar Sinha, principal economist, India Ratings and Research.

Impact of 2nd Wave

Production of coal, natural gas, refinery products, steel, cement and electricity rose 7.4%, 20.6%, 2.4%, 25%, 4.3% and 7.2%, respectively, in June. Fertiliser production grew 2% while crude oil output contracted 1.8%.

Core sector output had grown 16.3% in May, 60.9% in April and 12.6% in March, benefiting from the low base of last year when the first wave of the pandemic had impacted production.

“For Q1 FY2022 as a whole, the core sector recorded a base-effect led YoY expansion of 25%, while remaining 4.5% lower than the pre-Covid level of Q1 FY2020, reflecting the impact of the second wave of Covid-19 on economic activity,” said Nayar.

The Index of Industrial Production (IIP) is likely to expand 12-20% in June.


Source link


Please enter your comment!
Please enter your name here

Latest news Online Slots Casino Review

All hail the mighty online slots casino! The thing that allows me to come home after a day at...

Emma Raducanu “Hungry To Get Better” After US Open Fairtytale

Emma Raducanu became the first qualifier to win the US Open.© AFPUS Open champion Emma Raducanu said she...

Feeling Lazy? Quickly Make Delicious Poha Idlis To Beat Your Mid-Day Hunger

Soft, fluffy and steamy are all the things that describe this food - can you guess what it...

Shree Cement Shares Rise On Capacity Expansion Plan

<!-- -->Shree Cement shares rose as much as 2.6% to hit an intraday high of Rs 31,441.05.Shares of...

UAE economic reforms: UAE wants quick trade talks, some deals signed in 6-12 months

The United Arab Emirates will pursue an aggressive timetable to negotiate economic agreements with eight countries it wants...

Harsh Varrdhan Kapoors Dinner Platter Is The Perfect Dose Of Taste And Health

Eating healthy can go a long way in keeping your mind and body happy. No one knows this...

Must read

You might also likeRELATED
Recommended to you