Core sector Current Affairs - 2019
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The data from the Ministry of Commerce and Industries has shown that the growth in the eight core sectors of the economy fell to a 16-month low of 3.5 per cent in November. The eight core sectors are coal, crude oil, natural gas, refinery products, fertilizer, steel, cement and electricity.
Growth of Core Sectors
The following observations can be made from the data of the Ministry of Commerce and Industries:
- The growth in the eight core sectors of the economy fell to a 16-month low of 3.5 per cent in November, after it had hit a three-month high of 4.8 per cent in October.
- The cement production saw growth reduce by more than half in November.
- In the steel sector, the output registered a 6 per cent rise in November.
- The 3.7 per cent growth in coal production was a three-month low.
- The growth in electricity generation also halved to 5.4 per cent in November.
- Crude oil output contracted by 3.5 per cent.
- The natural gas production managed to barely make it back to the growth charts with 0.5 per cent
- The output of the fertiliser sector contracted by a significant 8 per cent.
Economists contribute the slowdown to the unfavourable base effect, along with a sudden slowdown in the growth of cement production and electricity output.
According to index of eight core industries released by Ministry of Commerce and Industry, growth rate of eight infrastructure sectors slowed down to 4.8 per cent in October 2018. This was mainly due to contraction in production of crude oil, natural gas and fertilizer. It had recorded growth rate of 5% in October 2017. During April-October 2018-19, eight sectors recorded a growth rate of 5.4% against 3.5 per cent in the same period last year.
In October 2018, fertiliser production dropped sharply by 11.5%, crude oil by 5% and natural gas by 0.9% over the year-ago month. The production of coal, cement and electricity, on other hand, expanded in month under review. The growth rate of refinery products declined to 1.3% in October as against 7.5% in the same month last year. Similarly, steel sector growth too dipped to 2.2% against 8.6% in October 2017. The growth rate of eight core sectors, however, is more than 4.3 per cent expansion in September 2018.
Index of Eight Core Industries (ICI)
It is monthly production volume index considered as lead indicator of monthly industrial performance. It is calculated by using Laspeyre’s formula of weighted arithmetic mean of quantity relatives. It measures collective and individual performance of production in selected eight core industries viz. Natural Gas, Coal, Crude Oil, Fertilizers, Petroleum Refinery Products, Steel, Cement and Electricity.
It is compiled and released by Office of Economic Adviser (OEA), Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry. The eight infrastructure sectors, constitute 40.27% of total index of industrial production (IIP). These eight core industries have impact on general economic activities as well as industrial activities. (Base year for ICI is 2011-12).
Components and weightages covered in ICI
- Petroleum Refinery production (weight: 28.04%): It includes total refinery production (in terms of crude throughput).
- Electricity generation (19.85%): It includes actual electricity generation of thermal, nuclear, hydro, imports from Bhutan.
- Steel production (17.92%): It includes production of alloy and non-alloy steel only.
- Coal production (10.33%): It includes coal production excluding coking coal.
- Crude Oil production (8.98%): It includes total crude oil production.
- Natural Gas production (6.88%): It includes total natural gas production.
- Cement production (5.37%): It includes production of large plants and mini lants.
- Fertilizers production (2.63%): It includes production of Urea, Calcium Ammonium Nitrate (CAN), Ammonium Sulphate (A/S), Diammonium Phosphate (DAP), Ammonium chloride (A/C), Complex Grade Fertilizer and Single superphosphate (SSP).