Covid’s third wave subdued India’s eight core industries’ production in January 2022 on a sequential basis, official data showed on Monday.
The growth rate of the eight major industries in January 2022 rose to 3.7 per cent from 4.1 per cent in December 2021.
The Index of Eight Core Industries’ (ICI) index reading rose on a year-on-year basis, at 1.3 per cent during January 2021.
The ICI index comprises 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP), and comprises coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity.
“Final growth rate of Index of Eight Core Industries for October 2021 has been revised to 8.7 per cent,” a Ministry of Commerce and Industry statement said.
“The growth rate of ICI during April-January 2021-22 was 11.6 per cent (P) as compared to the corresponding period of last FY.”
On a sector-specific basis, the output of coal, which has a weightage of 10.33 per cent in the index, showed a growth of 8.2 per cent in January 2022 over the same month of the previous year.
Similarly, the output of refinery products, which has the highest weightage of 28.04 per cent, rose by 3.7 per cent, compared to the corresponding month of the last fiscal.
Electricity generation, which has the second highest weightage of 19.85 per cent, inched up by 0.5 per cent, whereas steel production was down by 2.8 per cent last month.
However, the extraction of crude oil, which has a weightage of 8.98 per cent, declined by 2.4 per cent during the month under consideration, even though the sub-index for natural gas output, with a weightage of 6.88 per cent, rose by 11.7 per cent.
Cement production, which has a weightage of 5.37 per cent, rose by 13.6 per cent in the month under review.
Fertiliser manufacturing, which has the least weightage — only 2.63 per cent — declined by 2 per cent.
“The third wave had an expectedly muted impact on India’s core sectors in January 2022, with the pace of growth slipping mildly to 3.7 per cent in that month from 4.1 per cent in December 2021,” ICRA Chief Economist Aditi Nayar said.
“The disaggregated trend is slightly less encouraging, with all the sectors except coal and steel recording a slowdown in the YoY performance in January 2022 relative to the previous month, amid a contraction in crude oil and fertiliser output.”
Acuite Ratings & Research Chief Analytical Officer Suman Chowdhury said: “While the core sector has been largely resilient to the third wave of the pandemic witnessed in the month of Jan’ 22, the weaker momentum in output growth can be attributed to the uncertainty created by the spread of Omicron.
“We continue to believe that government’s thrust on infrastructure segment and the progress in vaccinations will strengthen core sector activity over the next few quarters, higher commodity prices and fresh supply chain bottlenecks in the context of the emerging geo-political risks through the Russia-Ukraine conflict will remain a point of concern.”