8 core industries' output contracts 0.8%

New Delhi: Contracting for the seventh consecutive month, the output of eight core infrastructure sectors dropped by 0.8 per cent in September, mainly due to decline in production of crude oil, natural gas, refinery products and cement. The production of eight core sectors had contracted 5.1 per cent in September 2019, data released by the Commerce and Industry Ministry showed on Thursday.

The decline in output during the month under review was lowest since March. Barring coal, electricity and steel, all sectors -- crude oil, natural gas, refinery products, fertiliser and cement -- recorded negative growth in September 2020. During April-September, the sectors' output dropped by 14.9 per cent as compared to a growth of 1.3 per cent in the same period of the previous year.

The output of crude oil, natural gas, refinery products, fertiliser, and cement declined by 6 per cent, 10.6 per cent, 9.5 per cent, 0.3 per cent, and 3.5 per cent, respectively.

On the other hand, the coal, steel and electricity sector output grew by 21.2 per cent, 0.9 per cent and 3.7 per cent, respectively, during the month under review.

Commenting on the numbers, Aditi Nayar, Principal Economist at Icra Ltd, said: "The substantial improvement in the core sector performance in September 2020 was driven by the base effect-led uptick in coal production, related to heavy rainfall and labour issues in some mines in September 2019. With improved mobility of people and goods, the contraction in refinery products halved in September 2020, an encouraging trend that may continue in the immediate term."

The eight core industries account for 40.27 per cent in the IIP.

"While many lead indicators have displayed signals of a strengthening economic recovery in September 2020, we caution that the sustainability of the upturn may not be universal, and await signs of its durability," Nayar added.