Aided by a strong show by steel, the eight core industries’ output grew 5.1 per cent in May. This was higher than the 4.1 per cent growth recorded in May 2018, but lower than the 6.3 per cent seen in April 2019.

For April-May 2019, the output of the eight core industries — steel, coal, crude oil, natural gas, refinery products, fertilisers, cement and electricity — grew 5.7 per cent, against 4.4 per cent in the same period last year.

This May, the steel and electricity sectors showed strong growth at 19.9 per cent and 7.2 per cent respectively. In May 2018, steel output had contracted 0.1 per cent while electricity output was up 4.1 per cent.

 

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Madan Sabnavis, Chief Economist, Crisil Ratings, said the base effect has clearly helped in the case of steel.

He further said growth has been lacklustre in the other sectors — negative in crude oil, refinery products and fertilisers and nil in natural gas. In the case of mining and cement it was 1.8 per cent and 2.8 per cent, respectively.

There was limited activity in the government sector as, due to the election, government expenditure was focussed on social programmes that included the rollover of subsidies in some segments. This can be seen in the low growth in cement for the second successive month (at 2.8 per cent), he said .

Base effect

The base effect will affect the growth in the core sectors in June and July, and that will ultimately affect industrial growth.

Five of the eight sectors had witnessed high growth in June and July of 2018, which will impact the growth this year, Sabnavis added.

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