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Core sector rises marginally to 2.9% in March

The Index of Eight Core Industries rose 2.9% in March, data released by commerce and industry ministry on Tuesday showed, reversing the 2.4% contraction in February.

NEW DELHI: The combined output of eight core sector industries rose marginally in March after a contraction in the previous month, suggesting improvement in industrial output growth.


The Index of 
Eight Core Industries rose 2.9% in March, data released by commerce and industry ministry on Tuesday showed, reversing the 2.4% contraction in February. 

The eight core sector industries -- coal, natural gas, crude, fertilizers and electricity --- have a combined weight of 37.9% in the Index of Industrial Production (IIP), making the core index a lead indicator of industrial production. 

The 
IIP for March will be released on May 10, and will provide evidence of recovery after growth stagnated at 0.6% in February. In the entire fiscal 2012-13, the eight core sectors grew by 2.6%, the slowest in the 2004-05 series, reflecting the slowdown in the Indian economy which expanded 5% in the year, the slowest in a decade. 

The detailed data provides more things to cheer. Except natural gas, all other seven sectors reported a positive growth in March, the first time since June 2010.
Natural Gas output fell by 17.7% in March because of the decline in output of gas from the D6 natural gas block in the KG basin. 

Steel and cement showed 6.6% rise in output each, suggesting some revival in construction activity, but experts are not yet reading too much into the data. 

"IIP will not see a decisive upturn anytime soon. The weak phase of industry is expected to continue for a while it seems," said DK Joshi, chief economist, 
CrisilBSE -0.17 %. "The investment rate is also not expected to pick up, as the rate cut by RBI have not brought the lending rates down." 

The RBI is likely to cut policy rates on May 3 by 25 basis points.