Eight core sectors Current Affairs - 2019

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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.

Core sector grows 4.7% in October 2017

According to index of eight core industries released by Ministry of Commerce and Industry, Core sector growth has grown 4.7% in October 2017, matching September 2017 growth, which has been revised down from 5.2%.

This is the highest core sector growth since March 2017. April-October 2017 growth stood at 3.5%, down from 5.6% in the corresponding period last year.

Key Facts

The eight core sectors — coal, natural gas, crude oil, refinery products, cement, fertilisers, steel and electricity — had clocked a growth of 7.1% in October 2016. However, in October 2016, right core sectors grew at slower pace, chiefly due to subdued performance of cement, steel and refinery segments.

Steel production rose 8.4% and was followed closely by refinery products that reported 7.5% growth. Coal output grew 3.9% in October 2017 against 10.4% in September 2017. Cement production fell 2.7% against 0.1% rise in September 2017. Crude oil production also fell 0.4% in October 2017.

Core Industry sector

Core industry can be defined as the main industry of the economy. In most countries, there is particular industry that seems to be 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 40% of weight of items included in Index of Industrial Production (IIP), which measures factory output.