September: Core Sector Industries’ Output Grows at 7-Month Low

India’s infrastructure industries grew at a seven-month low as growth in most industries eased with economists expecting semiconductor shortages to impact industrial growth.

Core sector rose 4.4% in September against 11.5% in August and 0.6% in the year-ago period. It contracted 5% month-on-month against a decline of 1% in August.

Growth slowed in five of the eight infrastructure sectors.

The Index of Core Industries measures the output of eight infrastructure sectors: coal, steel, cement, fertiliser, electricity, natural gas, refinery products and crude oil. Six of these sectors — coal (8.1%), refinery products (6%), steel (3%), cement (10.8%) and electricity (0.3%) — posted lower growth in September, while output in natural gas (27.5%) and fertiliser (0.02%%) rose. Crude oil output shrank at a lower pace of 1.7% from a year earlier.

As per Madan Sabnavis, chief economist at CARE Ratings, the surprise factor here is coal, which registered high growth of 8.1% on top of 21% last year, which means that the shortage that was witnessed in October was more due to inventory management rather than production.

Six month growth rate has been 11.7% for coal. “Power growth was just 0.3% reflecting the inventory management on coal. This would also mean that there was relatively less industrial activity,” he said.

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