Led by a low base effect, the combined output of the eight core sector industries rose by a 32-month high pace of 6.8 percent in March, as compared to a year ago. In the previous month of February, output had fallen at the fastest pace in six months, contracting 3.8 percent.
However, despite the return to the growth charts in the end of the year, the cumulative core sector output in FY21 fell to -7 percent. This was due to core sector output contracting in as manay as 8-months of the financial year. Annually, the core sector output had witnessed a marginal 0.4 percent rise in FY20 and a 4.4 percent rise in FY19.
The data released by the commerce and industry ministry on April 30 showed production declined in four out of the eight core sector industries. While cement production rose the highest, rising 32.5 percent, the output of the coal sector witnessed the steepest fall, reducing 21.9 percent.
However, the rise did not impress economists. "Notwithstanding the base effect led-jump in the core sector growth to a 32-month high 6.8 percent in March 2021, the pace of expansion was weaker than our forecast of a 10 percent expansion, with a surprisingly sharp contraction in coal, and milder de-growth in fertilisers, crude oil and petroleum products," Aditi Nayar, Principal Economist at ICRA, said.
However, the latest infrastructure numbers released by the government seem suggest higher growth going forward, simply due to a construction boom.
The eight core industrial of coal, crude oil, natural gas, refinery products, steel, cement, fertilizer and electricity have a combined weight of over 40 percent in the Index of Industrial production, or IIP.