Higher coal, cement production boost factory output

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New Delhi, May 31 (IANS) Favourable base effect, along with higher production of coal and cement, gave a boost to India’s eight major industries’ output in April 2018, official data showed on Thursday.

Accordingly, the output of eight major industries accelerated by 4.7 per cent in April from a rise of 4.4 per cent in March.

“The combined Index of Eight Core Industries stands at 124.2 in April 2018, which was 4.7 per cent higher compared with the index of April 2017,” the Ministry of Commerce and Industry said in a statement here.

“Its cumulative growth from April to March (2017-18) was 4.3 per cent.”

According to the Ministry, the ‘Index of Eight Core Industries’ (ECI), which represent major sectors like coal, steel, cement and electricity, also showed an uptrend on a year-on-year (YoY) basis.

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The index had registered a rise of 2.6 per cent during the corresponding month of 2017.

The ECI index carries 40.27 per cent weightage of the Index of Industrial Production (IIP), which is the macro gauge for India’s factory output.

On a sector-specific basis, refinery products, which has the highest weightage of 28.03 per cent, grew by 2.7 per cent in April 2018 compared with the corresponding month of the last fiscal.

Electricity generation, which has the second highest weightage of 19.85, picked up by 2.2 per cent.

Steel production, the third most important component with weightage of 17.92, rose by 3.5 per cent during the month under review, whereas coal mining, with a 10.33 weightage, edged higher by 16 per cent.

On the other hand, extraction of crude oil, which has an 8.98 weightage, declined by (-)0.8 per cent during the month under consideration.

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The sub-index for natural gas output, with a weightage of 6.88, inched up by 7.4 per cent.

Cement production, which has a weightage of 5.37, edged higher by 16.6 per cent in April 2018.

Fertiliser manufacturing, which has the least weightage — only 2.63 — edged-up by 4.6 per cent during the month under review.

“A favourable base effect boosted the core sector growth to 4.7 per cent in April 2018,” said Aditi Nayar, Principal Economist, ICRA.

“The underlying trends are favourable with a sequential dip in growth in only two of the eight constituents, and only one sector displayed a contraction amid double digit expansion in cement and coal.”

India Ratings and Research’s Chief Economist Devendra Kumar Pant said: “Barring crude oil, all other seven industries grew in April 2018 compared with March 2018. Electricity growth was at 10 months’ lowest; coal and cement grew in double digits.”

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“Two consecutive months of strong coal production augurs well for coal supply position for power production, but the cause of worry is non-thermal power production. Cement and steel production in April 2018 can result in a nearly stable IIP for infrastructure or construction goods.”

–IANS

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