Eight core sectors Current Affairs - 2020

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GoI releases First Advance Estimates: GDP Growth Rate predicted as 5%

On January 7, 2020, the CSO (Central Statistics Office) operating under Ministry of Statistics and Programme implementation released the first advance estimates of GDP number for the fiscal year 2020. The numbers are in line with the predictions of Reserve Bank of India

Highlights

According to the report, the GDP growth is estimated at 5% for the year 2019-20 as against 6.8% in 2018-19. The report says that the deceleration is mainly due to the decline in the growth of manufacturing sector. The manufacturing sector grew at the rate of 2% in 2019-20 as compared to 6.9% in 2018-19.

Also, the core sectors and the industrial sectors showed a 11-year drop in GDP growth. There are eight core industries in India. It includes crude oil, electricity, refineries, coal, cement, natural gas, electricity and fertilizers.

The estimates are based on the growth rate in the first two quarters.

Advance Estimate

The first advance Estimate is based on four main factors namely advance estimates of crop production, Index of Industrial Production IIP (of the months April-October, 2019), financial performances of specific firms in the first and second quarter and accounts of state and central governments.

The second advance estimates will be released after Budget.

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Growth of eight core sectors slows to 2.1% in July 2019

According to official data released by Government, Growth of eight core industries (Index of Eight Core Industries) dropped to 2.1% in July 2019. It was mainly due to contraction in coal, crude oil, natural gas and refinery products. These eight sectors had expanded by 7.3% in July 2018. Moreover, it has declined by 6.2% during April to July, 2019-20 over the corresponding period of previous year.

Sector wise breakaway (July 2019)

Index of Eight Core Industries

It is monthly production index, which is also considered as lead indicator of the monthly industrial performance. It contains production and growth figures of eight core industries viz. steel, electricity, crude oil, refinery products, coal, cement, natural gas and fertilizers. It is compiled by Central Statistic Organisation (CSO) under Union Ministry of Commerce and Industry based on monthly production information received from source agencies. These core industries are considered as main or key industries of the economy and serve as backbone of all other industries

Weightage: Petroleum Refinery production (weight: 28.04%), Electricity generation (19.85%), Steel production (17.92%), Coal production (10.33%), Crude Oil production (8.98%), Natural Gas production (6.88%), Cement production (5.37%), Fertilizers production (2.63%

Relation with index of industrial production (IIP):  These eight core sectors constitute 40.27% of IIP.

Economic Slowdown

The data concerned with slowdown in growth of eight core sector comes days after India’s GDP growth rate slowed to 6-year low of 5% for first quarter of FY 2019-20. It was down from 5.8% in fourth quarter of FY 2018-19. In first quarter of the previous financial year, GDP growth was 8.2%. This effectively means that India’s growth rate has fallen by 3% in barely a year’s time. This is fourth successive decline in GDP, from 8% in 1st quarter of FY19 to 5% in this quarter. It is also the slowest growth since Q1 in 2013.

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