According to government data released on Monday, the growth of eight core industries dropped to 2.1 per cent in July. The drop in growth, which comes amid the Indian economy recording its lowest quarterly growth for 6.5 years, is being credited mainly to a contraction in coal, crude oil and natural gas production.
Core industries including coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity comprise 40.27% weight in the Index of Industrial Production (IIP) benchmark and had seen a comparatively much larger growth of 7.3 per cent in the same month last year. While the cumulative growth of the sectors was about 5.9 per cent in the first quarter of the previous year, the same was recorded at around 3 per cent for this year, meaning growth was almost halved.
The growth rate in production of steel, cement and electricity declined to 6.6%, 7.9% and 4.2%, respectively, as against 6.9%, 11.2% and 6.7% while the output of coal, crude oil, natural gas and refinery products was recorded negative in a review.
According to a month-wise statistical reading, the growth of these eight sectors have been declining ever since April this year. It came down to 5.2% in April from 5.8%. In May, it further declined to 4.3% in May and 0.7% in June.
Steel production presented a marginal increase by 4.9% during the month in comparison to the data of the April-February 2018-19 period where the sector recorded a growth of 4.7%.
As per data released by the NSO, the GDP growth rate also slowed in Q1, falling to a six-year low at 5%, mainly due to a sharp dip in the growth of the manufacturing sector that has remained almost flat on the growth chart at 0.6% growth. However, on a slightly positive note, fertiliser output presented a marginal growth by 1.5 per cent in July as against 1.3 per cent in July 2018. Another well-performing sector was Cement with an increase in production by 8 per cent in February.
The government of India has, however, launched two waves of measures aimed at kick-starting economic growth. The first wave entailed announcements that were meant to re-assure wealth-creators that the Centre intended to live up to PM Modi's Independence Day observation that wealth creators were a national wealth and not to be viewed with suspicion. The second, comprising four massive PSB (Public Sector Bank) mergers, were aimed at resolving credit woes in order to propel India towards its $5 trillion economy goal.