Production in the basic sector falls 2.6% in November 2020

Output in India’s top eight sectors hit a three-month low in November, contracting 2.6% during the holiday month, with coal, fertilizers and electricity the only sectors to record positive year-over-year growth, suggesting that the economy is still not out of the woods.

The good news is that the index of the top eight industries has been revised upwards for the months of August and October, based on updated data received by the Office of the Economic Advisor of the Promotion Department. industry and domestic commerce that compiles the data.

Read also: The Indian economy will contract by 4% in 2020-2021, forecasts the AfDB

Output in key sectors fell just 0.9% in October from an earlier estimate of a 2.5% contraction. The index had contracted 0.1% in September, while final revised figures for August reflect a contraction of 6.9% from the original estimate of a much larger contraction of 8.5% .

Electricity production rose for the third consecutive month, but at a slower pace of 2.2%, while coal production increased year-over-year for the fourth consecutive month to 2.9 %.

Fertilizer production continued to grow, increasing 1.6% in November. Fertilizers remain the only sector to have recorded growth in the first eight months of 2020-2021, growing 3.8% between April and November 2020-2021.

Basic sector production fell 2.6% in November

On a cumulative basis from April to November, the index for the eight sectors was down 11.4% from the same period a year ago. These sectors represent around 40% of the industrial production index or IIP.

Also read: The output of the eight main industries contracts 9.6% in July

Production of refining products, natural gas and crude oil continued to decline, falling 4.8%, 9.3% and 4.9% respectively. A new source of concern, however, emerged in the steel and cement sectors, where output slumped 4.4% and 7.1%, respectively, in November, after a nascent recovery.

“Steel, after posting three consecutive months of positive growth, and cement, after posting positive growth in October 2020, contracted in November 2020. This shows that the industrial recovery continues to be uneven and fragile Said Sunil Kumar Sinha, senior economist at India Ratings and Research.

“Considering the performance of eight key sectors in November 2020, we expect PII growth to remain weak in November 2020. In addition, it will be interesting to see if the momentum recorded in factory production due to pent-up demand and festive of durable and non-durable consumer goods over the past two months continues into November 2020, ”Sinha said.

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