Core Industry Growth Reinforces Economic Turnaround: Assocham

New Delhi: Growth of 5.8 per cent in the eight core industries in August reinforces that economic turnaround is underway although the coal sector's performance may not sustain, the The Associated Chambers of Commerce and Industry (Assocham) said on Tuesday.

(Read: August infrastructure output growth hits 2-month high)

Performance of steel, cement, electricity and coal sectors is satisfactory and reinforces the turnaround of the economic activity in the factory output, the industry body said.

"However, going forward, maintaining such a healthy growth in the coal sector now has become doubtful. The government needs to reallocate coal mines by formulating a robust and future proof policy," Assocham secretary general D S Rawat said.

The Supreme Court earlier this month quashed allocation of 214 out of 218 coal blocks to various companies from 1993 impacted estimated investment of around Rs 2 lakh crore.

"Sustaining good performance of the core sector requires demand revival which, in turn depends on the credit policy and interest rates. The RBI must take note of the growth imperatives and suitably change its stand," Mr Rawat said.

Led by healthy growth in coal, cement and electricity sectors, the eight core industries grew 5.8 per cent in August this year as compared to 4.7 per cent in the corresponding month last year.

Coal, cement and electricity grew by 13.4 per cent, 10.3 per cent and 12.6 per cent respectively last month, according to the Index of Industrial Production data released on Tuesday.

Steel production expanded by 9.1 per cent in August this year as against 8.1 per cent in August 2013.

However, production of crude oil and natural gas declined by 4.9 per cent and 8.3 per cent respectively. Refinery products and fertiliser sectors too recorded negative growth of 4.3 per cent and 4.3 per cent respectively.

During April-August, 2014-15, the eight sectors have grown by 4.4 per cent, against 4.2 per cent in the year-ago period.

The August figures would have positive impact on overall industrial production as the eight core sectors have a combined weight of about 38 per cent in the Index of Industrial Production (IIP).