Eight core industries’ growth fell to 4.3 per cent in September, from 4.7 per cent in the same month last year as production of crude oil and natural gas declined.

The growth rate is also lower than 4.7 per cent and 7.3 per cent in the preceding months.

However, for the cumulative April-September 2018-19, core industries’ growth came in at 5.5 per cent, much higher than 3.2 per cent growth in same period last year.

The eight core industries are coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity.

Growth in electricity (8.2 per cent in September 2018) and coal (6.4 per cent) has been impressive which augurs well for future growth.

Reacting to the core data, Madan Sabnavis, Chief Economist, CARE Ratings, said the low base effect advantage appears to have worn off by September.

The high growth in cement (11.8 per cent in September) has been sustained continuously this year for six months, which is a big positive, he said. Progress in roads and housing would be the two factors contributing to this growth, according to Sabnavis. Cement output grew at a whopping 14.4 per cent in April-September.

Steel, fertilizers output

Sabnavis said the growth in steel at 3.2 per cent in September has tapered off in the last two months, and a push from private investment is needed to move things forward. Growth in fertilizers at 2.5 per cent has turned positive as the industry prepares for the Rabi season requirements, he said.

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Aditi Nayar, Principal Economist, ICRA, said the decline in the core sector growth in September relative to the previous month was mild albeit broad-based, led by refinery products, cement, crude oil, natural gas and steel.

In line with the previous month, two of the eight constituents recorded a year-on-year contraction in September, which remains a cause for some concern, she said.

“Given the overhang related to the dip in the growth of core sector output, contraction in non-oil merchandise exports, impact of floods in some parts of the country, and the distortion related to a later start to the festival season in 2018 compared to 2017, industrial growth is likely to display a muted base-effect led pickup at best in September, from the modest level in August,” Nayar said.

The uptick in core sector growth in H1 of FY2019 relative to H1 of FY2018 has primarily been driven by cement, coal, refinery products and electricity, according to Nayar.

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