February marked the sharpest fall in India’s core sector output in the past six months. The output of India’s eight core industries recorded a 4.6pc contraction, while steel production declined by 1.8pc in February compared to the prior year.
India’s recovery struggled amid a resurgence of COVID-19 in February. All sectors reported a de-growth.
Core sector output fell by 8.3pc from April-February 2020-21, according to data released by the government on March 31. In April 2019, core sector output was up by 5.2pc from the prior year while in 2020, core sector output witnessed the deepest fall of 37.9pc from the prior year on the back of strict lockdown in the country. In September and December, core sector output turned positive. In January, the output had risen by 0.9pc.
Steel production declined by 1.8pc in February compared to the previous year while the cumulative index dipped by 12.4pc from April 2020-February 2021 compared to the prior year. The steel sector was one of the sectors that observed a less severe decline. Demand from infrastructure was struggling to pick up as COVID cases were rising and steel prices were deemed high by several consumers of steel including the auto sector. Production of cement and steel, the two major commodities consumed by infrastructure declined in February.
Cement production dipped by 5.5pc from the prior February. Petroleum refinery production declined sharply by 10pc, which was a major contributor to the decline of India’s overall output. Coal production fell by 4.4pc in February from the prior year. Electricity generation dipped marginally by 0.2pc in February.
A UN report has pegged India’s growth at 7pc in 2021, while Fitch Ratings has revised India’s FY2021-2022 growth rate to 12.8pc, up from 11pc forecasted earlier. The official Economic Survey estimates India’s FY2022 growth at 11pc, while Reserve Bank has given a more conservative estimate of 10.5pc GDP growth in the current fiscal.