Eight core sector industries shrink 2.5% in February - mydigitalfc.com

The eight core sector industries together saw a 2.5 per cent decline in production in February, hinting at a similar drop in factory output for the month. During the same month a year ago, core sector output had grown 7.7 per cent. Factory output will fall not only in February but also in March, showed a HSBC survey. The bank has projected March factory output to be lowest in 15 months, in continuation of the fall seen in the previous month. Factory output data for February will be out in a fortnight from now. Led by natural gas, core sector industries such as coal, electricity generation and crude oil saw steep decline in output during February. This is for the first time in this financial year that the core sectors have seen negative growth in output, which has sent ominous signals on what is in store for overall industrial growth. The eight core sector industries — coal, crude oil, natural gas, refinery products, fertilisers, electricity, cement and finished steel — have 37.9 per cent weightage in the index of industrial production (IIP). The natural gas sector led the fall with over 20 per cent decline in output. Industry veterans attributed it to a drop in gas production in the Reliance Industries (RIL)-operated KG D6 gas fields. Not to be left behind, coal companies led by Coal India (CIL) and its subsidiaries reported an 8 per cent decline in production. Electricity generation fell by 4.1 per cent and crude oil output by 4 per cent. The HSBC survey attributed the likely fall in factory output during February and March to serious power cuts that impacted manufacturing units. The sharp decline in February core sector performance has had an impact on the overall performance in the first 11 months of the just-concluded financial year. The cumulative core sector growth during this period has fallen to 2.6 per cent against 5.2 per cent in the same period of the previous year. Fertiliser companies reported 4 per cent lower production in February against 4.1 per cent growth in the same month a year ago, thanks mainly to high input costs, pricing instability and policy paralysis. The only saving grace seems to be cement production, which grew 3.9 per cent, though much lower than the 9.8 per cent growth recorded in the same month a year ago. There was also an upward trend in the output of petroleum refinery products, which grew 4.3 per cent compared with 6 per cent growth in the same month a year ago. Steel production grew merely 0.5 per cent against 8.7 per cent in February 2012. This signals a possible stagnation or very modest growth in the real estate and construction sectors. The eight core sector industries had grown 3.1 per cent in January and 2.5 per cent in December 2012. On the other hand, industrial output grew 2.4 per cent in January compared with just one per cent growth in the same month a year ago. The HSBC India manufacturing purchasing managers' index (PMI) — a measure of factory output — stood at 52 in March, down from 54.2 in the previous month. However, the index has remained above the 50-mark for more than three years now; a drop below this level indicates contraction. India's current account deficit hit a record 6.7 per cent of GDP during the October-December quarter at $32 billion on account of a surge in oil and gold imports, besides weak exports. badarinath@mydigitalfc.com via Business - Google News http://news.google.com/news/url?sa=t&fd=R&usg=AFQjCNF1yWo4zYpLHWcUPAptJLiBns777A&url=http://www.mydigitalfc.com/news/eight-core-sector-industries-shrink-25-february-334

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