Macro Indicators: Core Industries’ Data

The data for eight core industries have been released recently. These industries have a combined weight of 37.90% in the index of industrial production (IIP). This index stood at 144.4 for the month of February 2013 and growth has contracted by 2.5% as compared to an expansion of 7.7% witnessed in the same month last year. The decline in growth in February 2013 can be attributed to the negative growth witnessed in electricity generation and in the production of Crude Oil, Coal, Natural Gas and Fertilisers. Talking of the fiscal year 2013, the cumulative growth rate of the core industries stood at positive 2.6% during the period April-February 2012-13. However, it is much lower when compared to the growth of 5.2% witnessed during the corresponding period in the previous fiscal.

Let us now take a look at these eight industries one by one. Beginning with coal (weight 4.38%), this industry has contracted by 8% in the month of February 2013 as compared to a growth of 18% witnessed in the same month last year. It has begun to witness some negative vibes from the month of November 2012. Second in line is crude oil (weight 5.22%), which registered a negative growth of 4% as against a growth of 0.3% in February 2013. Natural Gas (weight 1.71%) was negative both in February, 2013 at -20.1% and in February 2012 at -7.6%.

Petroleum refinery production (weight 5.94%) had a growth of 4.3% in February 2013 as compared to its growth at 6.0% in February 2012. Fertilisers (weight 1.25%) registered a negative growth of 4% in February 2013 against 4.1% in February 2012. Steel production (weight 6.68%) had a growth rate of 0.5% in February 2013 against 8.7% growth in February 2012.

Cement production (weight 2.41%) registered a growth of 3.9% in February 2013 against a 9.8% growth in February 2012. And finally, Electricity generation (weight 10.32%) contracted to 4.1% growth in February 2013 compared to its 8.6% growth in February 2012.

This performance stands as one of the worst performances in decades. This drop is likely to weigh heavy in the factory output as these eight core industries have a combined weight of 37.90% in the IIP, the data for which are slated to be released on April 12. The last contraction in industries was seen in February 2001. The core sector (which comprised of six industries then) had contracted by 1% in 2001.