8 core industries' output contracts 9.6% in July

Barring fertiliser, all seven sectors -- coal, crude oil, natural gas, refinery products, steel, cement and electricity -- recorded negative growth in July.

Contracting for the fifth consecutive month, the output of eight core infrastructure sectors dropped by 9.6 per cent in July due to decline mostly in production of steel, refinery products and cement.

The production of eight core sectors had expanded by 2.6 per cent in July 2019, showed data released by the commerce and industry ministry on Monday.

Barring fertiliser, all seven sectors -- coal, crude oil, natural gas, refinery products, steel, cement and electricity -- recorded negative growth in July.

The rate of contraction in the sectors, however, has come down from 37.9 per cent in April.

The output of steel, refinery products, cement, natural gas, coal, crude oil and electricity declined by 16.5 per cent, 13.9 per cent, 13.5 per cent, 10.2 per cent, 5.7 per cent, 4.9 per cent and 2.3 per cent, respectively.

On the other hand, the fertiliser sector output grew by 6.9 per cent during the month under review as against 1.5 per cent rise in July 2019.

During April-July 2020-21, the sector's output dipped by 20.5 per cent as compared to a growth of 3.2 per cent in the same period previous year.

Commenting on the numbers, ICRA Ltd principal economist Aditi Nayar said that based on the available trends for the core sector, auto production and merchandise exports, "We expect the contraction in the Industrial Index of Production (IIP) to ease to 7-11 per cent in July 2020 from 16.6 per cent in June 2020."

The eight core industries accounts for 40.27 per cent in the IIP.

"We continue to expect a multi-speed recovery going forward, characterised by regional and sectoral unevenness," she said.

Photograph: Ajay Verma/Reuters