Aided by base effect, the output of eight core industries grew a robust 7.5 per cent in October 2021, official data released on Tuesday showed.
This was higher than the 4.5 per cent growth recorded in September 2021 and 0.5 per cent growth recorded in October last year.
The chart toppers
The latest performance was driven by a sharp rise in output in coal (14.6 per cent); natural gas (25.8 per cent); refinery products (14.4 per cent); cement (14.5 per cent); and electricity (2.8 per cent).
The remaining constituents — fertilisers (0.04 per cent) and steel (0.9 per cent) — remained flat or displayed moderation in their pace of YoY growth. However, crude oil recorded contraction of 2.2 per cent in October 2021.
Meanwhile, the government has revised upwards the core sector output growth for July 2021 to 9.9 per cent, from 9.4 per cent projected earlier.
Madan Sabnavis, Chief Economist, CARE Ratings, said: “With overall growth being 7.5 per cent this month, we could expect IIP growth to be in the region of 6-8 per cent with consumer goods, in particular, driving this number just before the Diwali season.”
He highlighted that coal and cement are two sectors that continued to register high growth rates over impressive rates last year. While coal output grew 14.6 per cent over 11.7 per cent, cement grew 14.5 per cent over 3.2 per cent. “The coal picture is reassuring because this was the time when the country was challenged by shortages following a prolonged monsoon which came in the way of mining. Also this was a global problem,” he said.
In the case of cement, there has been continued focus of the government on roads (seen in the fiscal numbers too), which had added to demand. This may be expected to be sustained in the coming months too, he added.
Aditi Nayar, Chief Economist, ICRA, said the divergence in the double-digit growth of cement with the marginal rise in steel is reflective of the cutbacks in auto production, whereas construction activity appears to be healthy.
“With a mixed trend displayed by most early indicators that are available for November 2021, we expect the core sector growth to slip to under 5 per cent for this month. While the core sector growth has accelerated and the festive season trends were broadly positive, the 22 per cent contraction in auto output is likely to push the October 2021 IIP growth to below 2.5 per cent”, she said.