Core sector performance hits 14-year low

For the first time in 14 years, India’s core sector performance hit a rock bottom by shrinking 5.2% in September’19, against a 4.3% growth last year. The Index of Eight Core Industries, which measures output in coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity, has a 40% weightage in the broader IIP. It is being estimated that IIP may now slump further from a 1.1% contraction in August, its worst performance in over seven years.

According to experts, this indicates that the economy may have slumped further in the second quarter of the current financial year and a recovery may take time. Given the deterioration in industrial activity, the RBI is expected to reduce rates again in December.