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New Delhi, August 31, 2020
The deceleration in the production rate of India's eight major industries narrowed on a sequential basis in July, but remained deep in the red on a year-on-year count.
As per the official data, the Index of Eight Core Industries for July declined by (-) 9.6 per cent (provisional) compared to decline of (-) 12.9 per cent (revised) during the previous month (June).
Though not comparable, the ECI index had shown a growth of 2.6 per cent in July 2019.
"The combined Index of Eight Core Industries stood at 119.9 in July 2020, which declined by 9.6 (provisional) per cent as compared to the Index of July 2019. Its cumulative growth during April to July 2020-21 was (-) 20.5 per cent," said the Office of Economic Advisor, DPIIT, in the Index of Eight Core Industries for July 2020.
"Final growth rate of the Index of Eight Core Industries for April 2020 is revised at (-) 37.9 per cent."
The Eight Core Industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP). The eight industries comprise coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity.
On a sector-specific basis, the output of refinery products, which has the highest weightage of 28.03, declined (-) 13.9 per cent in July 2020 compared to the corresponding month of the last fiscal.
Similarly, electricity generation, which has the second highest weightage of 19.85, inched lower by (-) 2.3 per cent.
Steel production, the third most important component with weightage of 17.92, was lower by (-) 16.4 per cent during the month under review, while coal mining, with a 10.33 weightage, edged-lower by (-) 5.7 per cent.
The extraction of crude oil, which has an 8.98 weightage, declined by (-) 4.9 per cent during the month under consideration.
The sub-index for natural gas output, with a weightage of 6.88, declined by (-) 10.2 per cent.
Cement production, which has a weightage of 5.37, slid by (-) 13.5 per cent in the month under review.
However, fertiliser manufacturing, which has the least weightage -- only 2.63 -- rose by 6.9 per cent last month.
According to ICRA's Principal Economist Aditi Nayar: "The mild improvement in the pace of contraction in the eight core sectors in July 2020 trailed our expectation (-7.2 per cent), adding to the view that the momentum of the recovery stalled in that month, partly on account of the localised lockdowns. In particular, the performance of refinery products and cement worsened in July 2020 as compared to the previous month, highlighting the unevenness in the sectoral recovery patterns."
"The sharp easing in the contraction in coal output in July 2020 was partly driven by the favourable base effect and a modest pickup in the offtake levels."