February core sector output sees steepest contraction in six months at 4.6%

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New Delhi: The output of eight core sectors declined by 4.6% in February, the steepest contraction in the last six months which experts said could drag the overall industrial production in the month into the negative territory. All the key segments, including coal, crude oil, natural gas, and refinery products, witnessed a decline in production, according to the official data released on Wednesday.

The growth rate of the eight infrastructure sectors — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — stood at 6.4% in February 2020.

Last time in August 2020, the sectors had recorded a negative growth of 6.9% in January this year, the segments have registered a positive growth of 0.9%.

According to the data, coal production declined by 4.4%, crude oil by 3.2%, natural gas by 1%, refinery products by a steep 10.9%, fertilisers by 3.7%, steel by 1.8%, cement by 5.5% and electricity by 0.2% in February.

According to commerce and industry ministry data, during April-February 2020-21, the eight sectors’ growth declined by 8.3% as compared to (+) 1.3% in same period of the previous fiscal.

Commenting on the figures, ICRA Ltd Principal Economist Aditi Nayar said that given the sharp base effect, the core sector output is expected to expand by 9-11% in March 2021, which should result in a modest growth of around 2% in Q4 FY2021.

“The lead indicators such as the core sector, auto output and non oil exports have revealed a decidedly mixed trend for February 2021. Based on the available data, we expect the contraction in the IIP (index of industrial production) to deepen to 2-3% in February 2021 from 1.6% in January 2021,” she said.