India's core industries output rises in December

On a sequential basis, the expansion rate in November had fallen by (-)0.6 per cent.

However, last month's expansion was lower on a year-on-year basis from 2.1 growth rate reported for December 2018.

The eight core industries include coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity.

As per the ECI, barring crude oil, natural gas and electricity, all other sectors expanded in December.

The ECI comprises of over 40 per cent of the weight of items included in the Index of Industrial Production (IIP).

On a sector-specific basis, the refinery output, which has the highest weightage of 28.03, rose by 3 per cent in December compared to the same month of the previous financial year.

However, electricity generation, which has the second highest weightage of 19.85, decreased by (-)1.6 per cent.

Steel production, the third most important component with a weightage of 17.91, inched up by 1.9 per cent during the month under review, whereas coal mining, with 10.33 weightage, was up 6.1 per cent.

Besides, the extraction of crude oil, which has a weightage of 8.98, declined by (-)7.4 per cent in December. The sub-index for natural gas output with a weightage of 6.87 inched lower by (-)9.2 per cent.

Conversely, cement output, which has a weightage of 5.37, grew by 5.5 per cent, and similarly, fertiliser production, which has the least weightage of 2.62, increased 10.2 per cent in December.

ICRA Principal Economist Aditi Nayar said: "Even though the pace of growth of the core sector industries in December 2019 is modest, the rebound after four months of contraction is encouraging. This reinforces our view that many sectors have seen a bottoming out of the growth slowdown, with a gradual recovery in the GDP expansion expected ahead."

"The sequential improvement in the performance of the core sector benefited from the pickup in coal, cement, steel and electricity, which offset the deterioration in the other four categories in December 2019."