The production of India’s eight major industries decelerated on both sequential and on year-on-year basis during November due to the base effect, as the output pace receded by (-) 2.6 per cent.
The Index of Eight Core Industries’ reading in November showed a contraction greater than that of (-) 0.9 per cent registered in October.
Though not comparable, on a YoY basis, the growth rate stood at 0.7 per cent in November 2019.
ECI index comprises of 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP).
Besides, the Ministry of Commerce & Industry in a statement revised the ECI index production rate in August to (-) 6.9 per cent.
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 2.9 per cent in November 2020 over the same month of the previous year.
But the output of refinery products, which has the highest weightage of 28.04, declined (-) 4.8 per cent in November 2020, compared to the corresponding month of the last fiscal.
Electricity generation, which has the second highest weightage of 19.85, increased by 2.2 per cent, whereas the steel production was down (-) 4.4 per cent last month.
The extraction of crude oil, which has an 8.98 weightage, declined by (-) 4.9 per cent during the month under consideration.
The sub-index for natural gas output, with a weightage of 6.88, declined by (-) 9.3 per cent.
Cement production, which has a weightage of 5.37, slid by (-) 7.1 per cent in the month under review.
Fertiliser manufacturing, which has the least weightage — only 2.63 — also declined by 1.6 per cent.
“Partly reflecting the unfavourable base effect, the performance of the core sectors deteriorated in November 2020 relative to the previous month, led by a broad-based downtrend in six of the eight constituents, except refinery products and crude oil,” ICRA Principal Economist Aditi Nayar said.
“In line with the core sector performance, the pace of growth of many other indicators slipped in November 2020, reflecting a combination of the base effect, fewer working days on account of a shift in the festive calendar, and a potential step-down in production following the satiation of pent-up demand.”
India Ratings and Research’s Principal Economist Sunil Kumar Sinha, said: “Barring coal, fertiliser and electricity all other core infrastructure sectors contracted in November 2020. Steel after recording three consecutive months of positive growth and cement after recording a positive growth in October 2020 slipped into contraction in November 2020.”
“This shows that the industrial recovery continues to be uneven and fragile. Given the performance of eight core sectors in November 2020, India Ratings and Research (Ind-Ra) expects the IIP growth to remain weak in November 2020.”