Core sectors' growth zooms 16.8% in May

The output of eight core sectors grew by 16.8 per cent in May, mainly due to a low-base effect and uptick in production of natural gas, refinery products, steel, cement and electricity, official data released on Wednesday showed. The eight infrastructure sectors of coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity had contracted by 21.4 per cent in May 2020 due to the lockdown restrictions imposed to control the spread of the Covid-19 infections. In March this year, these key sectors had recorded a growth of 11.4 per cent, and 60.9 per cent in April.

Commenting on the numbers, Sanjay Aggarwal, president, PHD Chamber of Commerce and Industry, said: "The growth in May 2021 is majorly supported by the growth of steel, natural gas, refinery products, cement and electricity. However, sequentially, the growth of core infra has been decelerated by (-) 3.7 per cent in May 2021 due to lockdown conditions and curfews in many states."

Aditi Nayar, Chief Economist, Icra, adds: "With the base becoming less distorted and the widening of state-wise restrictions, the core sector expansion expectedly flattened in May from the high 61 per cent in April. The core index in May was a substantial 8 per cent lower than the pre-Covid level of May 2019, led by all the components except natural gas. Based on the core sector data as well as the performance of other high-frequency indicators such as auto production, exports and generation of GST (goods and services tax) e-way bills, we expect the IIP (index of industrial production) growth to moderate substantially to 20-25 per cent in May 2021 from the high 134.4 per cent in April 2021."

According to the commerce and industry ministry data, production of natural gas, refinery products, steel, cement and electricity jumped by 20.1 per cent, 15.3 per cent, 59.3 per cent, 7.9 per cent and 7.3 per cent in May, as against (-) 16.8 per cent, (-) 21.3 per cent, (-) 40.4 per cent, (-) 21.4 per cent and (-) 14.8 per cent in May 2020, respectively. Coal output too rose by 6.9 per cent during the month under review as against a negative growth of 14 per cent in the same month of the previous year. Fertiliser and crude oil segments recorded a negative growth during the month under review. During April-May this fiscal, the eight sectors grew by 35.8 per cent compared to a negative growth of 29.4 per cent in the same period last year.