Core sector output declines to 4-month low of 8.1%

India’s eight core industries’ growth slowed to a four-month low of 8.1% in September from a 14-month high of 12.5% in August.

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According to data released by the government, the growth of India’s eight core industries dropped to a four-month low of 8.1% in September from a 14-month high of 12.5% in August. This was primarily attributed to a significant decline in the production growth of electricity, crude oil, and refinery products.

The production of eight core sectors also fell by 4.8% in September, the biggest drop in five months.

Experts predict that considering the output of the core sector, September’s Index of Industrial Production (IIP) will likewise print in single digits. Approximately 40% of the IIP is made up of the eight core industries. Typically, core sector production falls in September compared to August, but the 4.8% drop in September is the second highest in the last 11 years. In September 2019, the core sector’s output fell 6.1% month on month.

Rainfall in India was 13% above the benchmark in September, contributing to a slowing of activity in many core industries except fertilisers.

However, among the seven of the eight core sectors that experienced slower output growth in September compared to August, only crude oil production experienced a 0.4% year-on-year contraction during the month. After a two-month pause, September saw a contraction in crude oil production again.

The output of refinery products decreased to 5.5% from 9.5% in September, while the production of electricity decreased to 9.3% from 15.3% in August. During that time, the output of the cement industry fell to 4.7% from 19.3%, and the output of the coal sector fell to 16.1% from 17.9%.