Core Growth Up 5.3% in February

Core sector output grew 5.3% year on year in February on the back of steep rise in cement and fertilisers production, but could not match the previous month’s growth rate of 6.1%.

Official data showed a 22.9% rise in cement output and 5.3% increase in fertiliser production in February compared with a 19.6% rise and 1.6% decline, respectively, in January.

The eight infrastructure sectors of coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity that make up the core sector index constitute 40.27% of the Index of industrial Production used to measure industrial growth.

Experts expect the industrial growth for February to be down marginally from January, but remain high following strong core sector performance in the month.

ICRA expects IIP growth at 6.5- 7.0% in February even as it sees sequential moderation in the pace of expansion. Industrial production was up 7.5% in January.

Coal and steel production grew 1.4% and 5% respectively during February against 6.6% and 8.7% growth respectively in the same month last year.

Petroleum refinery production surged 7.8% in February against a 2.8% fall in the year-ago month. Electricity generation grew 4% in February against 1.2% expansion in February 2017.

While rising fuel prices may dampen refinery product demand and consumption a bit, strong vehicle sales are expected to drive consumption growth, said Devendra Kumar Pant, chief economist at India Ratings and Research, a Fitch group company. Electricity growth is also likely to improve in coming months due to stable IIP growth and summer month demand, he said.

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