The growth of the central sector in September contracts for about 8 years
NEW DELHI: The eight central sectors contracted to their lowest level in almost eight years in September, dragged down by a decrease in seven of the eight components and increased pressure on the authorities to reveal measures to reverse the slowdown.
The data published by the Ministry of Commerce and Industry showed on Thursday the eight main sectors: coal, crude oil, natural gas, refinery products , fertilizers, steel, cement and electricity: it decreased by 5.2% in September, its biggest decline in the 2011-12 series. This was lower than the 0.1% revised upwards in August and well below 4.3% in September 2018.
Industrial production graphic-2
In the first half of fiscal year 2019-20, the central sector registered a growth of 1.3%, lower than 5.5% in the same period of the previous year. The sector represents almost 40% of the index of Industrial production (IIP) and the poor performance of September is not a good omen for the IIP data, which will be published later. Economists said they expect the IIP data to be in the negative zone in September.
Negative growth in IIP cannot be ruled out in September 2019, given that the central sector has contracted sharply and constitutes 40% of the items included in IIP, said Madan Sabnavis, chief economist at Care Ratings.
Some economists said the GDP figures For the second quarter of the fiscal year, which will be published later in the month, it could be affected by the sad presentation in several data points. GDP data for the June quarter showed that economic growth slowed to a minimum of more than 6 years of 5%.
“With the year-on-year performance of several main indicators that worsen in the recently concluded quarter in relation to Q1 FY2020, we anticipate that GDP and GVA growth could fall further in the second quarter of FY2020, despite a favorable base effect and the mattress provided by lower raw material costs, said Aditi Nayar, principal economist at the ICRA credit rating agency.