Core sector growth slows to 8-month low of 0.5% in April

NEW DELHI: Growth in the country's key core sector slowed to an 8-month low in April as six of the eight sectors slowed sharply, with three of them contracting during the month. Data released by the ministry of commerce and industry on Tuesday showed the growth in eight core sectors - spanning coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity - slowed to 0.5% in April, below the upwardly revised 4.6% in March and also way below the 6.9% in April last year.

The cement sector grew by 6.7%, lower than the 12.2% in March, while the steel sector grew by 3% during the month, slower than the 9.3% in March. The coal sector grew by 3.5% in April, higher than the 1.6% in March, while the natural gas sector grew by a paltry 0.4%, above the contraction of 12.7% in March.

The core sector accounts for nearly 41% of the index of industrial production (IIP), and experts said that the sluggish outcome in April will have an impact on the overall IIP numbers, which would be released later this month. "The deceleration was broad-based, led by six of the eight sectors, barring coal and natural gas. Based on the tepid rise in the core sector and the performance of the other available high-frequency indicators, we expect the IIP growth to moderate sharply to 1% in April. The healthy growth in non-oil exports may provide an upside, unless the same represents round-tripping of some imports," said Aditi Nayar, chief economist at ratings agency Icra.

The crude oil sector contracted for the fourth consecutive month, declining by 2.8%, while the refinery products segment fell by 4.5% during the month. The fertilisers sector contracted by 4.2% during April after expanding by 8.8% in March. The electricity sector grew by 1% in April, slower than the 7.5% in March.