The growth of eight core sectors has decelerated to 3.4 per cent in January compared to 5.7 per cent in the same month last year, thanks to plummeting output in three key segments — cement, fertilisers and refinery products. This is the lowest core sector growth since August 2016.

In the period April 2016 to January 2017, the cumulative growth of the core sectors, which carry 38 per cent weightage in the overall industrial production output, was 4.8 per cent, against 2.9 per cent in the corresponding period of the previous fiscal.

Growth in cement, fertilisers and refinery products declined 13.3 per cent, 1.6 per cent and 1.5 per cent respectively, according to data released by the Ministry of Commerce and Industry here on Tuesday. Quite strikingly, in January last year, the three products logged robust growth, at 9.2 per cent, 8.2 per cent and 9 per cent respectively.

Nat gas surge

“As expected, core sector growth slipped in January 2017 relative to the previous month, as the spike in steel expansion eased to some extent. Additionally, cement, electricity and refinery products recorded some loss of momentum. The sharp surge in natural gas benefited from a favourable base effect. The continued de-growth in cement output highlights that the disruption to construction activities that set in after the note-ban is persisting,” said Aditi Nayar, Principal Economist, ICRA Ltd. However, during the month under review, sectors such as steel and natural gas registered double digit growth at 11.4 per cent and 11.9 per cent respectively.

Last year in the same month, the steel sector did not record any growth while the natural gas segment had logged negative growth of 15.3 per cent.

“The fading impact of the minimum import price from next month onward would temper steel production growth,” cautioned Nayar.

Electricity generation grew 4.8 per cent in January but was subdued compared to a double-digit growth of 11.6 per cent growth in January 2016. Similarly, coal production also grew at a muted pace of 4.8 per cent against 7.9 per cent last year.

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