Contracting for the eighth consecutive month, the output of eight core infrastructure sectors dropped by 2.5 per cent in October, mainly due to decline in production of crude oil, natural gas, refinery products and steel.
The production of eight core sectors had contracted 5.5 per cent in October 2019, data released by the Commerce and Industry Ministry showed on Friday.
While coal, fertiliser, 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 per cent as compared to a growth of 0.3 per cent in the same period of the previous year.
The output of crude oil, natural gas, refinery products, and steel declined by 6.2 per cent, 8.6 per cent, 17 per cent, and 2.7 per cent, respectively. The growth rate in fertiliser production has declined to 6.3 per cent in October, from 11.8 per cent in the same month last year.
On the other hand, the coal, cement and electricity sector output grew by 11.6 per cent, 2.8 per cent and 10.5 per cent, 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 per cent.
Commenting on the numbers, Icra Ltd Principal Economist Aditi Nayar said: "In our view, the non-core portion of the IIP (Index of Industrial Production) 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 per cent in October 2020".
Subsequently, she said, growth in many sectors may moderate in November 2020, on the back of some satiation of the pent-up demand as well as the temporary impact of a larger number of holidays.
Sunil Kumar Sinha, Principal Economist, India Ratings & Research, said that core sector data suggests the industrial recovery is "still weak" and the traction seen in IIP growth lately is triggered largely by the festival demand.
The eight core industries account for 40.27 per cent in the IIP.