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Feb core sector growth at five-month high of 4.5%

Business Standard:  April, 2014

New Delhi: Core industries’ output grew 4.5 per cent in February — a five-month high — against 1.6 per cent in January, official data released on Monday showed.

This raised the hope of a stronger recovery in industrial growth in February than just 0.1 per cent in January, as the eight core industries — fertilisers, cement, steel, electricity, crude oil, coal, petroleum refinery products and natural gas — constitute almost 38 per cent of the Index of Industrial Production (IIP).

However, core sector and IIP do not always correlate in one-to-one manner. For example, core sector grew 1.6 per cent in January this year against 2.1 per cent in December 2013. However, IIP contracted in December 2013 and grew in January this year.

Two core sectors contracted in February, against three in January. It was because coal output rose marginally by 0.1 per cent against a contraction of 0.7 per cent in the previous month.

A fall in natural gas also decelerated. It was 5.2 per cent in January and 4.4 per cent in February. However, fertilier production, which rose 1.2 per cent in January, declined 0.7 per cent in February.

The saving grace in the core sector was electricity generation, which rose a whopping five-month high of 10.4 per cent in February. However, by the time IIP data comes in, electricity generation data goes for revision.

Elsewhere, steel production rose 4.8 per cent in February against 3.4 per cent in January; cement 2.3 per cent against 1.5 per cent; refinery products 3.2 per cent against a fall of 4.5 per cent; and crude oil by 1.9 per cent against three per cent.

Industrial output grew in January after contraction for the previous three months.