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The overall index of India’s eight core sector stood at 126.6 in June 2021, a rise of 8.9%, compared with 116.3 in June 2020. The rise was due to easing of lockdown restrictions and low base effect.
The eight core sectors which include coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity contracted 12.4% in June 2020 due to the severe lockdown imposed to arrest the spread of coronavirus cases.
Steel was biggest beneficiary rising 25% in June 2021, as against the year-ago period. Natural gas (20.6%), refinery products (2.4%), fertilizers (2%), cement (4.3%) and electricity (7.2%). Crude oil was the only sector where there was a decline in production of 1.8%.
On a yearly basis, the core sectors’ production rose 25.3% in the Apr-Jun quarter of 2021, as against a contraction of 23.8% in Apr-Jun quarter of 2020. Again, steel and cement sector dominated the space compared with other sectors in the quarter. Steel output rose 86% in the first quarter of FY22 and cement increased by 52.9%.
Aditi Nayar, Chief Economist of rating agency ICRA, said that continued unlocking by the states, higher electricity demand and improved mobility are expected to boost the core sector growth to 11-14 per cent in July 2021.
She added that India’s IIP (index of industrial production) is likely to expand by 12-17 per cent in June 2021, exceeding the core sector growth, as some of the other high frequency indicators such as GST e-way bills and auto output have displayed a solid sequential uptick in that month, engendered by the relaxation of state level restrictions.