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Monday, February 01, 2016

India's core sector growth slows to 0.9 pct in December

Output of the eight core sectors expanded in December, albeit at a slower pace, indicating the challenges faced by the Modi government as it aims to jumpstart capital investment in a bid to boost growth in Asia’s third biggest economy, bolstering the case for further monetary policy easing by the RBI in the near-term. The index comprising of core infrastructure sectors which includes coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity climbed by 0.9 per cent in December 2015 from the same month a year ago, government data showed on Monday.

In November 2015, output of the core industries declined 1.33 per cent from the year ago month amid sharp decline in steel production due to weak demand and imports.

The index of the eight core industries has a 38 per cent weightage in the index of industrial production (IIP). India’s industrial output contracted 3.2 per cent in November as against 9.8 per cent growth in October 2015.

Steel production contracted by 4.4 per cent, year on year in December 2015 as cheaper Chinese imports hit domestic manufacturers while output of crude oil and natural gas, declined by 4.1 per cent and 6.1 per cent, respectively, a sign that capital spending remains soft as a global slowdown weighs.

Meanwhile, growth of output of coal, petroleum refinery, fertilizer, cement and electricity accelerated to 6.1 per cent, 2.1 per cent, 13.1 per cent, 3.2 per cent and 2.7 per cent respectively.