Base effect, refinery products decelerate November core factory output

oil refinery

New Delhi, Dec 31 : An unfavourable base effect and a contraction in refinery products, coal and cement production decelerated India’s eight major industries’ output in November to 3.5 per cent, official data showed on Monday.

According to the Ministry of Commerce and Industry, the Index of Eight Core Industries (ECI) rose by 4.8 per cent in October and 6.9 per cent in November 2017.

The index carries 40.27 per cent weight of the items included in the Index of Industrial Production (IIP).

“The combined Index of Eight Core Industries stood at 128.5 in November 2018, which was 3.5 per cent higher as compared to the index of November 2017. Its cumulative growth during April to November 2018-19 was 5.1 per cent,” the Ministry said in a statement.

On sector-specific basis, the output of refinery products, which has the highest weightage of 28.03, rose by 2.3 per cent in November 2018 compared to the corresponding month of the last fiscal.

Electricity generation, which has the second highest weightage of 19.85, picked up by 5.4 per cent.

Steel production, the third most important component with weightage of 17.92, was up by 6 per cent during the month under review, whereas coal mining, with a 10.33 weightage, edged higher by 3.7 per cent.

On the other hand, extraction of crude oil, which has an 8.98 weightage, declined by (-)3.5 per cent during the month under consideration.

The sub-index for natural gas output, with a weightage of 6.88, inched up by 0.5 per cent.

Cement production, which has a weightage of 5.37, edged higher by 8.8 per cent in November 2018.

Fertiliser manufacturing, which has the least weightage — only 2.63 — declined by (-)8.1 per cent during the month under review.

“As expected, the core industries recorded a slowdown in growth in November 2018 relative to the previous month, driven by a sharp dip in the pace of expansion of cement, coal and electricity,” said Aditi Nayar, Principal Economist, ICRA.

“Moreover, the continued YoY contraction in crude oil and fertiliser output is disappointing.”

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