August core sector up at 2.6% versus 1.1% in July

The August core sector grows at 2.6 percent versus 1.1 percent in July led by a 5.8 percent increase in petroleum refinery growth. Fertilisers, natural gas and cement also fared well. The number has come marginally better compared to July. However, in June it was 3 percent compared to 4.4 percent in May.

The eight core sector industries include coal, crude oil, natural gas, refinery products, fertilizer, steel, cement and electricity.

Sector wise, the coal production grew at 0.4 percent versus 0.3 percent in July. The crude oil production grew at 5.6 percent versus a decline of 0.4 percent month on month (M-o-M). Natural gas production grew at 3.7percent versus a decline of 4.4 percent M-o-M.

However, steel production was down 5.9 percent compared to 2.6percent decline seen in July. Petroleum refinery products grew at 5.8 percent against 2.9 percent growth M-o-M. Fertiliser production grew at 12.6 percent versus growth of 8.6 percent M-o-M. Cement production grew at 5.4 percent versus 1.3 percent growth posted in July. Electricity production grew at 5.6 percent as against growth of 3.5 percent in month of July.The April-August core industries grew at 2.2 percent.The growth in electricity seems to have come back a bit because for the whole of 2014, it grew in double digits but started falling in April, May 2015. However, now it is marginally up in August. After a long time the cement sector has seen growth.Steel continues to be a beleaguered sector on back of cheap dumping of imported steel and lack of demand. The growth for the fertilizer sector was exceptional. However, coal production at 0.4 percent was the biggest disappointment after growing at about 7 percent two months back. This dismal number could be becasue of the inability of discoms to buy more power, and hence less demand.Reacting to the numbers, Saumitra Chaudhuri, Former Member Planning Commission told CNBC-TV18 that core sector is not specifically a very good predictor of industrial output because in core sector oil is a very heavy component. So, if you have negative crude oil growth for one month, it generally pulls the overall number down and vice-versa. So, it doesn't tell you very much about what actually happening in the industry, he added However, it does tell you to some extent about the growth in coal, electricity and petroleum products. The petroleum and refinery consumption growth is quite good, partly because prices are lower, people are driving more and so is showing a steady growth. "The decline in electricity is mainly because of the slack demand by the power companies and power generation up to the month of August from December onwards has been quite pathetic. Till November it was very strong but after that it declined to the low single digits and coal too has basically followed that trajectory," said Chaudhuri.However, coal production for September could see an uptick mainly because up to September 24 electricity generation was up by about 15 percent which is quite extraordinary given the fact that they have been through a more remarkable change in the financial status of discoms, said Chaudhuri.  For the first time in the last 7-8 months, the actual generation is ahead of the target programs that they have got, he added.