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Higher coal, cement production boost factory output

Author: IANS/Friday, June 1, 2018/Categories: Economy

Higher coal, cement production boost factory output

New Delhi - Favourable base effect, along with higher production of coal and cement, gave a boost to India's eight major industries' output in April 2018, official data showed on Thursday.

Accordingly, the output of eight major industries accelerated by 4.7% in April from a rise of 4.4% in March.

"The combined Index of Eight Core Industries stands at 124.2 in April 2018, which was 4.7% higher compared with the index of April 2017," the Ministry of Commerce and Industry said in a statement here.

"Its cumulative growth from April to March (2017-18) was 4.3%."

According to the Ministry, the 'Index of Eight Core Industries' (ECI), which represent major sectors like coal, steel, cement and electricity, also showed an uptrend on a year-on-year (YoY) basis. 

The index had registered a rise of 2.6% during the corresponding month of 2017.

The ECI index carries 40.27% weightage of the Index of Industrial Production (IIP), which is the macro gauge for India's factory output.

On a sector-specific basis, refinery products, which has the highest weightage of 28.03%, grew by 2.7% in April 2018 compared with the corresponding month of the last fiscal.

Electricity generation, which has the second highest weightage of 19.85, picked up by 2.2%.

Steel production, the third most important component with weightage of 17.92, rose by 3.5% during the month under review, whereas coal mining, with a 10.33 weightage, edged higher by 16%.

On the other hand, extraction of crude oil, which has an 8.98 weightage, declined by (-)0.8% during the month under consideration.

The sub-index for natural gas output, with a weightage of 6.88, inched up by 7.4%.

Cement production, which has a weightage of 5.37, edged higher by 16.6% in April 2018.

Fertiliser manufacturing, which has the least weightage -- only 2.63 -- edged-up by 4.6% during the month under review.

"A favourable base effect boosted the core sector growth to 4.7% in April 2018," said Aditi Nayar, Principal Economist, ICRA.

"The underlying trends are favourable with a sequential dip in growth in only two of the eight constituents, and only one sector displayed a contraction amid double digit expansion in cement and coal."

India Ratings and Research's Chief Economist Devendra Kumar Pant said: "Barring crude oil, all other seven industries grew in April 2018 compared with March 2018. Electricity growth was at 10 months' lowest; coal and cement grew in double digits." 

"Two consecutive months of strong coal production augurs well for coal supply position for power production, but the cause of worry is non-thermal power production. Cement and steel production in April 2018 can result in a nearly stable IIP for infrastructure or construction goods."

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