Infrastructure Output Of Core Sectors Slips 4.6% In February 2021

Infrastructure Output in February 2021: The output of eight core infrastructure sectors declined 4.6 per cent, compared to last year, according to government data on Wednesday, March 31. The infrastructure output, which comprises eight core sectors including coal, crude oil, and electricity, registered a de-growth of 8.3 per cent during April-January 2020-2021. According to provisional data released by the Ministry of Commerce and Industry, the combined index of the eight core industries stood at 127.8 in February 2021. The eight core industries also constitute 40.27 per cent of the Index of Industrial Production (IIP). (Also Read: Infrastructure Output Of Core Sectors Up 0.1% In January 2021 )

The decline in February 2021 was led by a sharp contraction in the refinery products followed by a decline in cement and coal production. Coal, refinery products, crude oil, natural gas, fertilisers, steel, cement, and electricity sectors recorded negative growth of 4.4 per cent, 3.2 per cent, 1 per cent, 10.9 per cent, 3.7 per cent, 1.8 per cent, 5.5 per cent, and 0.2 per cent, respectively in February 2021.

The cumulative index of the core sectors recorded a de-growth of 8.3 per cent in the 11 months through February 2021, compared to a growth of 1.3 per cent registered in the year-ago period. The impact of the COVID-19 pandemic on the industrial sector has reflected in the output of core sectors. 

“The core sector data released for Feb 2021 reinforces the concerns on the pace of the industrial recovery and the likelihood of meaningful positive GDP growth in Q4FY21. With the overall core sector index witnessing a YoY decline of 4.6 per cent, the risks of a material contraction in IIP for the month, on the back of a 1.6 per cent decline already seen in Jan 2021, has visibly increased. The contraction in the core sector is broad-based with all eight sectors recording a decline from the Feb 2020 levels,'' said Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research.

''The largest decline is in refinery output which reflects a weaker than expected demand for retail fuels partly arising from the increased fuel prices apart from the continuing impact of the pandemic on overall mobility. However, coal output has seen a very steady sequential rise post-monsoon since Sep 2020 while power generation growth has been YoY positive except for Feb where it showed a nominal contraction,'' he added.

In January 2021, the industrial production contracted by 1.6 per cent, after registering a growth of one per cent in December 2020. According to the IIP data released by the Ministry of Statistics and Programme Implementation on March 12, 2021, the indices for the mining, manufacturing, and electricity sectors in January 2021 stand at 119.7, 135.1, and 164.2 respectively. (Also Read: Industrial Production Contracts 1.6% In January: All You Need To Know )