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The eight core industries’ output contracted 23.4 per cent in May, weighed in largely by the lockdown.
Except fertilisers, which grew 7.5 per cent, all the other seven core industries saw contraction. In the same month last year, core industries’ output grew 3.8 per cent on a year-on-year basis.
In April, which was the first full month of lockdown, the eight core industries’ output had contracted 37 per cent; for the April-May 2020 period, it shrank 30 per cent against 4.5 per cent growth in the same period last year, official data released on Tuesday showed.
The eight core industries are coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity.
In May, coal contracted 14 per cent (1.7 per cent growth in May 2019); crude oil 7.1 per cent (-6.9 per cent); natural gas 16.9 per cent (-0.1 per cent); refinery products 21.3 (-1.5 per cent); steel output contracted 48.4 per cent (13.3 per cent); cement output 22.2 per cent (2.8 per cent) and electricity generation fell 15.6 per cent (7.4 per cent growth).
The February core industries’ output growth has been revised to 6.4 per cent.
Commenting on the latest core sector growth, Madan Sabnavis, Chief Economist, CARE Ratings, pointed out that all sectors had shown an improvement in May given the partial easing of lockdown although growth was still negative, except in fertilisers.
“Fertilisers can be directly linked to good performance of agriculture and normal monsoon. Because of the partial lifting of lockdown in May, the decline was of lower magnitude than April for almost all the industries showing that demand has picked up,” Sabnavis said.
Aditi Nayar, Vice-President and Principal Economist, ICRA, said the pace of contraction in the core sector industries narrowed to 23.4 per cent in May, better than our 25-30 per cent forecast. The improvement relative to April was driven mainly by cement, steel, electricity and fertilisers, with coal, natural gas and refinery showing modest increase in production. Crude oil was an exception; its output in May was lower than in April.
“Based on the available trends, we expect the pace of contraction in the Index of Industrial Production to narrow to around 35-45 per cent in May 2020 from 55.5 per cent in April, she said.
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