28.11.09

Core grows 3.5%


Key infrastructure industries that account for over a quarter of the country’s industrial production grew a modest 3.5% in October 2009, the lowest in three months, indicating possibly a lower overall industrial growth for the month. Industrial production had grown 9.1% in September 2009 when core sector growth was somewhat better at 4.1%. In August 2009, industrial production was up 11% as the core sector had pitched in with a 7.8% growth. Industrial production data for October will be released on December 12. Despite the moderate core sector growth, economists are confident of a sustained recovery in the coming months. Crude oil was the worst performer and turned out to be the biggest drag on the index in the month under review. The core sector has a near-27% weightage in the index of industrial production (IIP) and is seen as an advance indicator of the trend in industrial production growth. Annual growth in domestic refinery production was the highest in 16 months and the overall production in October was 112.7% of installed capacity. The fall in crude oil production is attributed to the decline in output from ONGC as some its facilities were under maintenance in October. But with production from Cairn’s Mangala oil fields in Rajasthan going onstream, this segment is expected to put up a better show in the coming months. Steel production is also expected to remain buoyant on back of sustained recovery in the economy.

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