The growth in the core sectors in February was boosted by a sustained rise in cement production, up nearly 30 per cent, dwarfing growth in all other sectors. Four sectors performed poorer as compared to a month earlier. The data issued by the commerce and industry ministry on Wednesday showed the eight sectors cumulatively grew 4.3 per cent in the first eleven months (April to January) of 2017-18, lower than the 4.7 per cent growth rate in the corresponding period of 2016-17.
Among sectors, cement production continued to push up higher growth figures for the fourth month in a row. In February, it saw a growth rate of 22.9 per cent, as against 16.9 per cent in November 2017. “Cement and refinery products provided support to core sector growth in February 2018. Solid cement and increasing steel sector growth suggests construction activities are gathering pace, which is a positive for infrastructure sector,” said Devendra Kumar Pant, chief economist, India Ratings and Research.
The other major pillar of the construction sector, steel, saw production grow by 5 per cent, up from the 1.7 per cent rise last month, sparking the hope of growth revival in the realty and infrastructure segment. Favourable domestic demand and remunerative prices in international and domestic markets are likely to bolster domestic steel production growth in the near term, although the risk of trade wars could affect exports and imports. On the energy side, crude oil saw output contract by 2.4 per cent; natural gas fell by 1.5 per cent. Natural gas production had taken sustained hits to its growth every month since September 2017, when it had risen by 6.3 per cent. Crude oil has seen low or negative growth for the past one year.
“The trend in the growth of core sector output, auto production and non-oil merchandise exports signal a sequential moderation in the pace of expansion of the IIP in February 2018, despite the favourable base effect related to the dip in industrial growth to 1.2 per cent in February 2017 from 3.5 per cent in January 2017,” said Aditi Nayar, principal economist at ICRA.
However, industrial growth is expected to remain at a smooth clip of 6.5-7.0 per cent in February 2018, boosted by the robust expansion of cement (22.9 per cent), automobiles (27.3 per cent) and refinery products (7.8 per cent), she added.