Index of eight core sector released for May, output shrinks further

NEW DELHI: There is another piece of negative news coming as a fallout of COVID-19 pandemic in India. The office of the Economic Adviser, Department for Promotion of Industry and Internal Trade (DPIIT) has released Index of India's eight core industries for May, 2020. The index has contracted sharply for the third month in a row. The only relief is that the fall is lower than the record dip in April 2020. The fertilizer production has registered positive growth this month. The core sector data released by the govt for May, showed output shrank 23.4 percent compared to 37 percent in April, mostly due to large decline in steel (48.4 percent), cement (22.2 percent), electricity (15.6 percent) and refinery products (21.3 percent).

"In view of nationwide lockdown during April& May 2020 due to COVID-19 pandemic, various industries viz. Coal, Cement, Steel, Natural Gas, Refinery, Crude Oil etc. experienced a substantial loss of production" mentioned a press statement issued by the govt noted. "Final growth rate of Index of Eight Core sector for February'2020 is revised at 6.4 percent. The Eight Core Industries comprise 40.27 percent of the weight of items included in the Index of Industrial Production (IIP)" it added.

PSU Watch had on June 26 reported S&P Global Ratings saying that the Indian economy is in bad shape and overall growth may contract by 5 percent this financial year. "India's economy is in deep trouble. Difficulties in containing the virus, an anaemic policy response, and underlying vulnerabilities, especially across the financial sector, are leading us to expect growth to fall by 5 per cent this fiscal year before rebounding in 2021," S&P had said in a report. Also, the manufacturing Purchasing Manager's Index (PMI) released by IHS Markit earlier this month stood at 30.8 in May, slightly better than 27.4 recorded in April but still well below the 50 mark that divides contraction from expansion.

Here is the summary of the Index of Eight Core Sector:

Coal production (weight: 10.33 percent) declined by 14.0 percent in May 2020 over May 2019. Its cumulative index declined by 14.7 percent from April to May 2020-21 over corresponding period of the previous year.

Crude Oil production (weight: 8.98 percent) declined by 7.1 percent in May, 2020 over May 2019. Its cumulative index declined by 6.7 percent from April to May, 2020-21over the corresponding period of the previous year.

The Natural Gas production (weight:6.88 percent) declinedby16.8 percent in May 2020 over May 2019. Its cumulative index declined by 18.3 percent from April to May 2020-21 over the corresponding period of the previous year.

Petroleum Refinery production (weight: 28.04per cent) declined by 21.3 per cent in May 2020 over May 2019. Its cumulative index declined by 22.7percent from April to May 2020-21 over the corresponding period of the previous year.

Fertilizers production (weight: 2.63 percent) increased by 7.5 percent in May 2020 over May 2019. Its cumulative index increased by 2.0 percent during April to May 2020-21 over the corresponding period of the previous year.

Steel production (weight: 17.92 percent) declined by 48.4 per cent inMay, 2020 over May 2019. Its cumulative index declined by 63.3percent during April to May 2020-21 over the corresponding period of the previous year.

Cement production (weight:5.37 percent) declinedby22.2per cent inMay, 2020overMay,2019. Its cumulative index declinedby54.1per centduring April to May, 2020-21over the corresponding period of previous year.

Electricity generation (weight:19.85 percent) declined by 15.6 percent in May, 2020 over May 2019. Its cumulative index declined by 19.1 percent from April to May, 2020-21 over the corresponding period of the previous year.

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