Ministry of Commerce Current Affairs - 2019

Category Wise PDF Compilations available at This Link

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.

Government to constitute working group for revision of Wholesale Price Index

Central Government has constituted Working Group for the revision of the current series of Wholesale Price Index (Base 2011-12). It will be chaired by Prof. Ramesh Chand, Member, NITI Aayog. Office of Economic Adviser, Department for Promotion of Industry & Internal Trade will be nodal office for Working Group. It will process report / recommendation of this Working Group for further necessary action.

Terms of Reference of the Working Group are:

  • It will select most appropriate Base Year for preparation of new official series Wholesale Price Index (WPI) and Producer Price Index (PPI) in India.
  • It will review existing commodity basket of current series of WPI and suggest additions and deletions of commodities in light of structural changes witnessed in economy since 2011-12.
  • It will also review existing price collection system for manufacturing sector and suggest changes for improvement. It will also decide on computational methodology to be adopted for monthly WPI/PPI.
  • It will examine existing Technical Advisory Committee on Series of Prices and Cost of Living approved compilation methodology of PPI approved and suggest further improvement in compilation and presentation.
  • It may also recommend roadmap for switch over from WPI to PPI. It will also examine method of computing linking factor adopted so far and suggest appropriate changes in method of computing linking factor.
  • It will suggest any other improvements as may be necessary for enhancing reliability of the official series of WPI / PPI.

Background

The current series of Wholesale Price Index (WPI) with 2011-12 as base year was introduced by Government in May 2017.  However, since 2011-12, significant structural changes have taken place in the economy. Therefore considering these factors it has become necessary to examine coverage of commodities, their weighting diagram and related issues pertaining to existing series of index numbers of WPI.