Snaps 3-month slowing trend with 2.1% in February, rising from 1.5% in January
Core sector growth accelerated in February to 2.11% from the 1.5% in January, snapping a three-month slowing trend, according to official data released on Monday. Growth stood at 4.74% for October 2018, 3.38% for November and 2.64% for December.
Within the Index of Eight Core Industries, the crude oil sector contracted sharply in February, by 6.16%, compared with a contraction of 4.37% in January. The natural gas sector saw growth slowing to 3.7% from 6.21% over the same period.
“Core sector data having 40.27% weight in the Index of Industrial Production (IIP) once again disappointed by clocking a growth of 2.1% in February 2019,” Sunil Kumar Sinha, Director – Public Finance & Principal Economist, India Ratings and Research, said.
“After recording a high single-digit growth of 7.3% in July 2018, core sector has consistently recorded a growth of low single-digit indicating weakness in the industrial growth.”
The sectors that saw strong growth in February include cement and coal. The cement sector saw growth at 8.04% in February, although this was still lower than the 11% growth in the previous month. The coal sector witnessed growth accelerating in February to 7.26% from 1.74% in January.
The refinery products sector saw a contraction of 0.74% in February, as compared with a contraction of 2.58% in January.
The fertiliser sector also saw growth slowing drastically in February to 2.54% from 10.5% in January. The steel sector’s growth slowed somewhat in February to 4.87% from 5.52% in the previous month. Growth in the electricity sector remained more or less flat at 0.73% in February compared with 0.8% in January.
“India Ratings believes that under the current growth inflation dynamics some room is available for the Reserve Bank of India to go for a 25 basis point-cut in the policy rate in the First Bi-monthly Monetary Policy Statement for FY20,” Mr. Sinha added. “Ind-Ra further expects the policy stance of RBI to change from neutral to accommodative.”