Core sector output shrinks 15%
in
June, fertilizers buck trend
Economists say negative trend will continue for at least two more months
The output of eight core sector industries shrank for the
fourth straight month in
June 2020, although the contraction eased to 15%, showing some recovery from the
22% fall in May, according to
data released by the Commerce Ministry on Friday.
Economists expect the negative trend to continue for at
least two more months.
During AprilJune 2020
21, the sector’s output
dipped by 24.6% as compared to a positive growth of
3.4% in the same period previous year.
Monsoon boost
Of the eight core sectors, the
fertilizer industry was the
only one which saw actual
growth in June, with output
rising 4.2% in comparison to
June 2019. This, however, is
lower than the May 2020
growth of 7.5%, but reflects
the positive outlook in the
agriculture sector where a
normal monsoon is leading
to expectations of a bumper
kharif crop.
The remaining industries
showed contraction, with
the steel sector continuing to
remain the worst performer,
with a 33% drop in production in comparison to the
previous year. Cement production fell almost 7%, albeit
an improvement from the
22% contraction seen in May.
The energy sectors also
showed negative growth,
with coal production falling
15.5% and crude oil and natural gas production dropping 6% and 12%
respectively.
Refinery squeeze
Petroleum refinery production, which carries the greatest weight in the core sector
index, saw a contraction of
almost 9% while electricity
generation dropped 11%.
“The daily mobility and
power indicators do show
sequential improvement in
May and June but it is now
plateauing out in July, so it is
hard to predict when sluggish economic activity will
recover,” said India Ratings
chief economist D.K. Pant.
“The national lockdown
may have been lifted, but
several States have announced their own lockdowns till the end of August,
and even globally, we are
seeing a second wave of infections,” he said.
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