The output of eight core industries grew to a four-month high of 5.8 per cent in February, delivering a much better performance than contraction of 3.3 per cent in the same month last year.
The latest core industries growth print was also higher than the 4 per cent increase seen in January, official data released on Thursday showed.
The eight core industries are coal, crude, natural gas, refinery products, fertilisers, cement, steel and electricity.
The cumulative growth in output between April-February 2022 came in at 11 per cent, lower than 11.6 per cent seen in April-January this fiscal. Core industries had contracted 8.1 per cent in April-February 2021. The core sector accounts for 40 per cent of Index of Industrial Production (IIP).
The government has also now revised upwards the core sector growth for November 2021 from 3.1 per cent to 3.2 per cent.
Meanwhile, in February 2022, six out of the eight core industries recorded output growth on a year-on-year basis. Only crude oil and fertilizers recorded contraction at 2.2 per cent and 1.4 per cent, respectively.
The sectors that saw positive growth are coal (6.6per cent); natural gas (12.5 per cent); refinery products (8.8 per cent): steel (5.7per cent); cement (5 per cent) and electricity (4 per cent).
Coal, natural gas and refinery products have tended to show consistency in growth rates in the last few months. Cement, which had clocked two successive growth rates of above 14 per cent, saw moderation in growth for the month under review.
Sunil K Sinha, Principal Economist, India Ratings, said that although the February 2022 print of 5.8 per cent is better than 4 per cent growth seen in January 2022, it has been attained on a low base.
He said that the production level of crude oil, refinery products and fertilizer are still lower than the pre-Covid level (February 2020). Production of other core segments are also just above the pre-Covid level. “This shows that there is still a long way to go so far as revival of core sector output is concerned and going forward, the disruption to the global supply chain may further impinge on the availability of key raw materials like natural gas, coal, etc. in the domestic market due to the Russia Ukraine conflict,” said Sinha.
Aditi Nayar, Chief Economist, ICRA, said: “With a pick-up in growth of core sector output, higher daily average generation of GST e-way bills and continuing healthy performance of merchandise exports amid a deeper contraction of auto production, we expect the IIP growth to print sub-2.5 per cent in February 2022, lagging the core sector rise.”
Madan Sabnavis, Chief Economist, CARE Ratings, said that the negative and low base effect has propped up production for all segments. “For February, IIP growth may be expected to be in the region of around 3 per cent,” he said.