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The lifting of the lockdown since June (when Unlock 1.0 started) has led to better output for the eight core industries that month, although the overall picture remains in the negative territory.
The eight core industries’ output contracted 15 per cent in June, against 37 per cent and 22 per cent in April and May, respectively, when the country faced one of the strictest lockdowns to arrest the spread of Covid-19.
Last June, their output had grown 1.2 per cent.
The eight core industries are coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity. Last month, other than fertilisers (4.2 per cent growth), all saw contraction, official data released on Friday showed. Fertilisers was the only industry to register growth in June as well as in Q1, as it kept pace with kharif sowing.
While coal contracted 15.5 per cent (2.9 per cent growth in June 2019), crude oil contracted 6 per cent (-6.8 per cent), natural gas 12 per cent (-2.1 per cent), refinery products 8.9 per cent (-9.3 per cent), steel 33.8 per cent (+10.8 per cent ), cement 6.9 per cent (-1.9 per cent) and electricity 11 per cent (+8.6 per cent).
Silver lining
Madan Sabnavis, Chief Economist, CARE Ratings, said there is a slightly positive factor in the otherwise third negative growth rate in the core sector growth for June. “Clearly, as the government started permitting more economic activity there were some signs of production taking place even though at much lower levels,” he said.
He added that he expects the Index of Industrial Production (IIP) to contract 20-22 per cent for June. The IIP print for June will be better than May although it will still remain in negative territory, he added.
Aditi Nayar, Principal Economist, ICRA, said that IIP is expected to display a contraction of 15-20 per cent in June. “In conjunction with the core sector industries, indicators of freight, fuel consumption and GST suggest that the uneven improvement recorded by IIP in May 2020, continued in June 2020. Production appears to have been ramped up in various sectors in that month, to meet pent-up demand, with rural sentiment remaining resilient and urban consumption adjusting to a new normal,” she said.
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