Eight-core industries output contracts for 5th straight month

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Output of eight core sectors contracted in July 2020 by 9.6 per cent compared to the 2.6 per cent growth witnessed in the same month of the previous year. On a sequential basis, the output of eight core sector increased for four months in a row. But July was the 5th successive month of contraction despite the improvement.

Story: Shivani Sharma

Design: Pragati Srivastava

Rate of decline compared to the year-ago level was lower than it was in the previous three months. This, lesser decline, implies a recovery in the eight-core industries. Compared to the previous month, the index in July 2020 was higher by only 3.7 per cent while growth by a similar comparison was much higher at 8.1 per cent in June and 31.7 per cent in May 2020.

Coal production declined by 5.7 per cent in July 2020 at a faster pace than the 1.6 per cent contraction in July 2019. However, when compared with June 2020 coal production has improved considerably.

Production of crude oil contracted for the 4th successive month in July 2020 by 4.9 per cent on account of delay in production activities due to lockdown restrictions, non-availability of electric submersible pump (ESPs), delay in installation of new platforms, rise in water cut in wells.

Natural gas production declined successively for 16 months in July 2020 by 10.2 per cent as against 0.5 per cent de-growth in the same period last year.

Refinery production, which has higher weightage in eight core industries, contracted at a double-digit pace of 13.9 per cent, higher than -0.9 per cent in July 2019 owing to lower demand in domestic and global markets due to impact of COVID-19 lockdown and ongoing monsoons.

Output of fertilisers grew by 6.9 per cent in July 2020, higher than 1.5 per cent growth in July 2019 and 4.2 per cent in June 2020.

Output of steel sector decreased at a double-digit rate for 5th month in a row. It contracted by 16.4 per cent compared with the 8.1 per cent growth in July 2019. It can be ascribed to subdued construction activities owing to monsoon and lockdown restrictions, and low demand from auto sector.

Cement production witnessed a dip of 13.5 per cent, a successive de-growth for fifth month, due to subdued construction activities and high inventories in the real estate sector. The increased demand seen from rural India too moderated as the pandemic spread in the hinterland.

Electricity production fell by 2.3 per cent as against the 5.2 per cent growth witnessed in July 2019. On a sequential basis, however, it was higher than the 10 per cent contraction seen in the previous month. This reflects resumption of industrial and business activity leading to pick up in commercial demand.