Core Industries Current Affairs

Eight core sectors growth slips to 3.6% in May 2017 

The growth of eight core sectors slowed to 3.6% in May 2017 due to fall in output of coal and fertilisers. It was 5.2% in May 2016. In April 2017, these eight sectors had recorded a growth rate of 2.8%.

Core industry can be defined as the main industry. In most countries, there is a particular industry that seems to be the backbone of all other industries and it qualifies to be the core industry.

In India, there are eight core sectors comprising of coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity. The electricity has the maximum weight of 10.32% followed by Steel (6.68%), Petroleum Refinery (5.94%), Crude Oil production (5.22 %), Coal production (4.38 %), Cement (2.41%), Natural Gas production (1.71 %) and Fertilizer production (1.25%).

These eight Core Industries comprise nearly 38% of the weight of items included in the Index of Industrial Production (IIP), which measures factory output.

Key Facts
  • In May 2017, Coal and fertiliser productions recorded negative growth of 3.3% and 6.5%, respectively. Steel sector growth dipped to 3.7% as against 13.4% in May 2016.
  • Slow growth in these key sectors may also have implications on the Index of Industrial Production (IIP) number as these segments account for about 41% to the total factory output.
  • However, growth in refinery products and electricity output grew by 5.4% and 6.4% in May 2017 as against 3.3% and 6.2%, respectively in the same period last year.
  • Natural gas production too grew by 4.5% in May 2017 as against a negative growth rate of 6.5% a year earlier.

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Industrial production grows 5.7% in November 2016

India’s factory output, measured by the Index of Industrial Production (IIP) has registered 5.7% growth in November 2016 as against 1.9% in October 2016.

It is the fastest growth recorded in more than four years and is largely on account of a low base effect. It also does not display the negative effects of demonetisation as production cycles in manufacturing take longer to adjust to any demand change.

Key Facts
  • Manufacturing sector grew by 5.5% in November 2016.
  • Mining sector output rose 3.9%.
  • Electricity generation sector increased 8.9%.
  • Capital goods output surged 15%.
  • Consumer durable output jumped 9.8%
  • Consumer non-durable production increased 2.9%
  • Overall growth in consumer goods output was 5.6%.

About Index of Industrial Production (IIP)

The IIP is compiled and published every month by Central Statistics Office (CSO) of the Union Ministry of Statistics and Programme Implementation. It covers 682 items comprising Manufacturing (620 items), Mining (61 items) & Electricity (1 item). The weights of the three sectors are 75.53%, 14.16%, 10.32% respectively and are on the basis of their share of GDP at factor cost during 2004-05. The eight Core Industries comprise nearly 38 % of the weight of items included in IIP.

Base Effect: It is basically the consequence of abnormally high or low levels of inflation in a previous month distorting headline inflation numbers for the most recent month.

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