New Delhi: The production of India’s eight major industries decelerated on a year-on-year basis during December.
The Index of Eight Core Industries’ reading in December showed an output contraction of 1.3 per cent from an expansion of 3.1 per cent.
On a sequential basis, the output of eight major industries had contracted by 1.4 per cent in November.
ECI index comprises 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP).
These industries comprise coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity.
On a sector-specific basis, the output of coal, which has a weight of 10.33 per cent in the index, performed better than others, showing an increase of 2.2 per cent in December 2020 over the same month of the previous year.
But the output of refinery products, which has the highest weightage of 28.04, declined 2.8 per cent in December 2020, compared to the corresponding month of the last fiscal.
However, electricity generation, which has the second-highest weightage of 19.85, increased by 4.2 per cent, whereas the steel production was down 2.7 per cent last month.
The extraction of crude oil, which has an 8.98 weightage, declined by 3.6 per cent during the month under consideration.
The sub-index for natural gas output, with a weightage of 6.88, declined by 7.2 per cent.
Cement production, which has a weightage of 5.37, slid by 9.7 per cent in the month under review.
Fertiliser manufacturing, which has the least weightage — only 2.63 — also declined by 2.9 per cent.
“Discouragingly, the core index continued to contract for the third consecutive month in December 2020, tempering the exuberance generated by the upticks recorded in several other lead indicators of the industrial and services sectors in that month,” ICRA Principal Economist Aditi Nayar said.
“Based on the plateau in the core sector data, juxtaposed with the uptick in auto production trends and recovery in non-oil merchandise exports, we expect the IIP to rebound to modest growth of 0.5-1.5 per cent in December 2020, trailing the level seen in October 2020. The available high-frequency indicators for January 2021, such as electricity demand, generation of GST e-way bills and rail freight, indicate a reasonably steady momentum of growth.”