Contracting for the eighth successive month, the output of eight core infrastructure sectors slipped by 2.5 percent in October, mainly due to a decline in production of crude oil, natural gas, refinery products and steel. The production of eight core sectors had contracted 0.1% in September 2020 and by 5.5 percent in October 2019.
While coal, fertilizer, cement and electricity recorded positive growth, crude oil, natural gas, refinery products and steel registered negative growth in the month under review. During April-October, the sectors' output declined by 13 percent as compared to a growth of 0.3 percent in the same period of the previous year. The output of crude oil, natural gas, refinery products, and steel declined by 6.2 percent, 8.6 percent, 17 percent, and 2.7 percent, respectively. The growth rate in fertilizer production has declined to 6.3 percent in October, from 11.8 percent in the same month last year. On the other hand, the coal, cement and electricity sector output grew by 11.6 percent, 2.8 percent and 10.5 percent, respectively, during the month under review.
The output of these eight key sectors is in the negative zone since March. In September, the rate of contraction was 0.1 percent. Icra Ltd Principal Economist Aditi Nayar said: "In our view, the non-core portion of the IIP may perform better than the core sectors in October 2020, led by the building up of stocks ahead of the festive season. Based on this, we expect the IIP to record a growth of 4-7 percent in October 2020."
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