TLI Staff
New Delhi: Driven primarily by base effect, the combined output of eight core industries grew 6.8% in March, 2021 compared to the same month a year ago.
As per data released by the government on Friday, four sectors — cement, steel, electricity and natural gas recorded positive growth during this period while the remaining four industries of coal, crude oil, fertilizer and petroleum refinery products registered monthly decline.
Cement production rose the highest logging 32.5% growth while coal production recorded the sharpest fall at 21.9%.
The eight core industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).
“The combined Index of Eight Core Industries stood at 143.1 in March, 2021, which increased by 6.8% (provisional) as compared to the Index of March, 2020. Its cumulative growth during April to March, 2020-21 has been (-) 7.0%,” said a statement from Ministry of Commerce & Industry.
According to the Ministry data, production of natural gas, steel, cement and electricity jumped 12.3%, 23%, 32.5% and 21.6% in March this year as against (-) 15.1%, (-) 21.9%, (-) 25.1% and (-) 8.2% respectively in the corresponding month last year.
Commenting on the numbers, ICRA Ltd Chief Economist Aditi Nayar said the 6.8% growth in March was “32-month high” and was due to the base effect.
As the government had announced a nationwide lockdown in March last year to contain coronavirus pandemic, industrial activities had virtually come to a halt in the last week of the month. Some of the sectors which depended on raw materials from virus-hit China had been affected even before the restrictions were imposed.
ICRA’s Aditi Nayar said that the low base of the lockdown-hit April 2020 would push up the year-on-year expansion of the index of eight core industries to a sharp 50-70 per cent in April 2021, with exceptionally high growth expected in cement and steel.
“However, we have observed a slackening in the sequential momentum in April 2021 in electricity demand, vehicle registrations, and generation of GST e-way bills, revealing the impact of the recent surge in Covid infections and localised restrictions,” she said.
Based on the available data, we project the Index of Industrial Production (IIP) to record a sharp growth of 17.5-25 per cent in March 2021, added Nair.