Core Sector Shrinks 1.3% in December

Steep declines in the output of steel, fertiliser and cement made an index of India’s infrastructure sectors contract 1.3% in December, official data released on Friday showed, contradicting hopes of a recovery in line with other economic indicators. The output of eight key core sectors contracted for the third month in a row. The Index of Eight Core Industries had grown 3.1% a year earlier and shrank 1.4% in November.

Barring coal and electricity, all sectors contracted last month. Growth in coal production slowed to a five-month low of 2.2% from 3.3% in November. Electricity output rose 4.2% in December against 3.5% in the trailing month.

Both steel and cement recorded a deterioration in the pace of contraction against November, suggesting low demand from the automobile sector and high raw material costs, coupled with relatively muted construction activities. Data released by the commerce and industry ministry showed that the pace of contraction slowed in crude oil, natural gas and refinery products, at 3.6%, 7.2% and 2.8%, respectively.

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