Eight Core Industries for September 2019

Production of core industries continues on the declining path in September 2019.

The growth in eight-core industries' output saw the steepest decline since 2011-12 of -5.2% year-on-year(YoY) in September 2019. The decline in output was led by a contraction in the production of coal (-20.5% YoY), crude oil (-5.4% YoY) and refinery products (-6.7% YoY). The coal industry output recorded a very steep fall which led to the overall fall in eight core index. Of the eight industries, only fertiliser industry witnessed growth in output in September 2019.

In comparison to the first quarter of the fiscal year, a slowdown in the output is across the board with all the 8 core industries experiencing a contraction or a fall in production growth. The industrial output of the economy has suffered mainly on the back of a fall in credit growth to industries. In the past two months, the challenges facing the Modi government is from both demand and supply side. The weak growth in bank lending is despite the reduction in interest rates and cheaper borrowing costs.

Even in terms of industrial production there are no signs of recovery, as can be seen from the last month's performance. The eight-core output grew marginally by 1.3% YoY for the cumulative period of April-September 2019. This indicates we still have a long way to go for the economy to see a revival in industrial growth and for the overall economy to stabilise.