Output of Eight Core Segments which have 37.9% weight in IIP dipped to 0.5% in January 2012

According to data released by the ministry of commerce and industry on 28 February 2012, output of eight core segments that comprise the manufacturing sector dipped to 0.5% in January 2012, marking the slowest growth in three months. Cumulative core sector growth for the April to January period was pegged  at 4.1% against 5.7% in the April-January period of 2010-11.

The growth was abysmal when compared to the 3.1 per cent surge in output recorded in December 2011.

The output of eight core segments - coal, crude oil, natural gas, refinery products, fertilizer, steel, cement and electricity which have a combined 37.9% weight in the index for industrial production had expanded 6.3% during January 2012.

The growth dip was attributed to a 2.9% contraction in steel output, 2% drop in crude oil output, 8.9% fall natural gas and 4.6% decline in refinery products.

Coal production expanded at 7.5% in January 2012 and cement recorded a robust growth rate of 10.6%. The other six sectors registered dismal performance. Electricity and fertilizer production grew at 2.4% and 4%, respectively.

Electricity generation, which has 10.32 per cent weight in the IIP fell to 2.4 per cent in January 2012 as compared to 8 per cent in December 2011.

Petroleum refinery production fell by 4.6 per cent in January 2012 as against a 0.8 per cent growth that was recorded in the previous month and a 8.7 per cent growth registered in January 2011.

There was a fall in the production of natural gas and crude oil as well. Output of natural gas fell by 8.9 per cent while that of crude oil fell by 2 per cent. The output in the steel sector fell by 2.9 per cent as against a growth of 8.7 per cent in December 2011.

A sharp fall in the output of the eight core sectors is likely to pull down the overall industrial output data given that the core sectors have a 37.90 per cent weightage in the overall Index of Industrial Production (IIP). The IIP had moderated to 1.8 per cent in December 2011 as a result of the poor performance of the manufacturing sector.