Indicating an uptick in factory output, which has been in the red for three months, the eight core sector industries grew 5.7 per cent in February –– a 15-month high –– with a sharp rise in production of fertiliser, cement and refinery products.
However, concerns over the Centre’s financial health remained, with its February-end fiscal deficit exceeding the Budgeted target for 2015-16.
The eight core industries –– cement, coal, crude oil, natural gas, refinery products, fertilisers, steel and electricity –– account for nearly 38 per cent of the Index of Industrial Production.
But the pace of growth in February still remained the highest since November 2015.
In the month under review, fertiliser production grew 16.3 per cent, cement rose 13.5 per cent and refinery products 8.1 per cent. However, steel production dipped 0.5 per cent, while growth in crude oil and natural gas output was negligible at 0.8 per cent and 1.2 per cent, respectively.
Despite the robust performance, calls for a rate cut by the Reserve Bank of India at its first bi-monthly monetary policy for 2016-17 on April 5 remain. Analysts warned against reading too much in the data as core sector growth has been quite volatile.
“A number of core sectors have been consistently performing poorly for several months, and there is little hope of a turnaround in their fortunes. However, it does raise hope that IIP data for February 2016 will be better,” said Sunil Sinha, Principal Economist, India Ratings.
Fiscal indicators However, another consideration for the RBI remained under stress: the fiscal deficit shot up to ₹5,72,872 crore by February 29, or 107.1 per cent of the revised estimate (RE) of ₹5,35,090 crore.
Finance Minister Arun Jaitley has stressed that the fiscal deficit target of 3.9 per cent will be met in 2015-16, and his officials have maintained that it is within reach. But spending outpaced receipts till February, according to data from the Controller General of Accounts.
Similarly, the revenue deficit jumped to ₹3,90,810 crore in the first 11 months of the fiscal –– or 114.4 per cent of the RE.
While total receipts grew to ₹9,83,001 crore, or 78.6 per cent of the full fiscal estimate, total expenditure was ₹15,55,873 crore, or 87.1 per cent of the RE.