The output of the eight core industries grew 0.9 per cent in December 2015 on the back of a strong showing by the coal, power and fertiliser sectors.
This performance was much better than in November 2015, when the cumulative output contracted by 1.3 per cent.
However, the growth in December 2015 was lower than the 3.2 per cent growth posted in December 2014.
For the April-December period this fiscal year, the core industries’ output grew 1.9 per cent, much lower than the 5.7 per cent growth in the corresponding period last year.
In December 2015, coal output grew a robust 6.1 per cent, higher than the 3.5 per cent growth in the previous month.
For the month under review, fertiliser output grew 13.1 per cent (13.5 per cent in November 2015), electricity output grew 2.7 per cent (0 per cent) and cement grew 3.2 per cent (-1.8 per cent).
Steel output contracted 4.4 per cent, largely due to increased competition from imports and some cases of dumping. Refinery products output grew 2.1 per cent in December 2015.
Expert views Commenting on the latest data, Devendra Kumar Pant, Chief Economist, India Ratings & Research, said that the core sector numbers point towards a mild expansion in industrial output in December 2015.
After negative growth in November 2015, mild growth provides some relief to industrial output in December, he said.
The eight core industries’ have 38 per cent weightage in the overall index of industrial production.
CIL boost Despite limited private sector mining, Coal India’s efforts have resulted in growth in domestic coal production and a reduction on the reliance on imported coal, Devendra said.
Aditi Nayar, Senior Economist, ICRA Ltd, said that the muted 0.9 per cent core sector growth for December 2015 is disappointing, particularly as it has fallen short of the average of 1.9 per cent for the first three quarters of 2015-16.
“Notwithstanding the weak core sector growth print for December 2015, we continue to expect the Reserve Bank of India to desist from monetary easing until greater clarity emerges regarding the fiscal consolidation path of the Union Government post the presentation of its Budget for 2016-17,” she said.
Meanwhile, CARE Ratings said in a statement that the steel sector had registered six successive months of negative growth, which is a concern.
IIP (Index of Industrial Production) growth for December would again be subdued with higher growth possible only in consumer goods and capital goods, the CARE Ratings statement said.
Prima facie a growth rate between 2-3 per cent could be expected based on past trends, it added.