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Unfavourable base effect weighs down December core output

Author: IANS/Thursday, February 1, 2018/Categories: Economy

Unfavourable base effect weighs down December core output

New Delhi - An unfavourable base effect for steel and refinery products pulled India's eight major industries output to a 5-month low in December.

On a sequential basis, the "Index of Eight Core Industries" (ECI) for December grew by 4% from a rise of 7.4% reported for November 2017.

Similarly, on a year-on-year (YoY) basis, the ECI, which represents the output of major sectors like coal, steel, cement and electricity showed a downtrend. It had risen by 5.6% in the corresponding month of the previous fiscal.

"The combined Index of ECI stands at 129.1 in December, 2017, which was 4% higher as compared to the index of December, 2016," the Ministry of Commerce & Industry said.

"Its cumulative growth during April to December, 2017-18 was 4%."

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 6.6% in December 2017 as compared with the corresponding month of the last fiscal.

Electricity generation, which has the second highest weightage of 19.85, picked-up by 3.3%.

Steel production, the third most important component with weightage of 17.92, rose by 2.6% during the month under review, whereas coal mining, with a 10.33 weightage, slipped by (-)0.1%.

Extraction of crude oil, which has an 8.98 weightage, declined by (-) 2.1% during the month under consideration.

The sub-index for natural gas output, with a weightage of 6.88, went up by 1%.

Cement production, which has a weightage of 5.37, edged higher by 19.6% in December 2017.

Fertiliser manufacturing, which has the least weightage -- only 2.63 -- edged-up by 3% during the month under review.

Aditi Nayar, Principal Economist, ICRA said: "An unfavorable base effect for steel and refinery products, as well as the continued weak performance of coal, contributed to the sequential dip in the core sector growth in December 2017 relative to the upwardly revised 7.4% expansion in November 2017."

"The disaggregated data reveals a broad-based sequential slowdown, with six of the eight constituents of the core sector, excluding cement and fertilizers, displaying a downtick in volume growth."

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rajyashree guha

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