New Delhi: The output of India’s eight major industries contracted in August - for the first time since April - by 0.5 percent from a growth of 2.7 percent in July and 4.7 percent in the same month last year.
The eight core industries - coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity - comprise 40.27 percent of the weight of items included in the index of industrial production (IIP).
As per the data furnished by the Ministry of Commerce & Industry, the cumulative growth in the April-August period of FY20 was 2.4 percent compared with 5.7 percent reported for the same period of the last financial year.
On a sector-specific basis, the refinery output, which has the highest weightage of 28.03, rose by 2.6 percent in August compared with the same month of the last financial year.
However, electricity generation, which has the second-highest weightage of 19.85, contracted by 2.9 percent. Steel production, the third most important component with a weightage of 17.91, was up 5 percent during the month under review, while coal mined, with a 10.33 weightage, was down by 8.6 percent.
The extraction of crude oil, which has a weightage of 8.98, declined by 5.4 percent during the month. The sub-index for the natural gas output with a weightage of 6.87 edged lower 3.9 percent.
Furthermore, cement output, which has a weightage of 5.37, decreased by 4.9 percent, whereas fertilizer production, which has the least weightage of 2.62, increased by 2.9 percent in August.
"This is the first contraction in core infrastructure output since April 2019, suggesting the weak demand conditions. All eyes are on festival demand to push industrial growth," said Devendra Kumar Pant, Chief Economist and Senior Director, Public Finance, India Ratings & Research (Fitch Group).
"The MPC will take note of weak demand, falling growth and low inflation in its monetary policy review on October 4, 2019. Ind-Ra expects a rate cut in October monetary policy review, however, the extent of cut could depend on the assessment of growth impact of policy measures announced by the government in the past few weeks." (IANS)