Core sector grows at 4.9% in November, 2016

The Dollar Business Bureau

The core sector has boasted a growth rate of 4.9% in the month of November 2016 over November 2015.

Of the eight industries that account for 38% of the Indian industrial production, power (which also holds the highest weightage) seems to have saved the day with a 10.2% growth, April 2016 being the last time it achieved a higher growth rate (14.7%).

Crude oil and natural gas have shrunk by 5.4% and 1.7% respectively, continuing the downward trend observed during the past few months. Cement (0.5%), steel (5.6%) and refinery products (2.0%) have performed dismally in comparison to October month’s growth numbers of 6.2%, 16.9% and 15.1% respectively. Coal takes the bright spot by sporting a growth of 6.4% after three months of negative numbers.

Overall, there's ample reason to cheer as 4.9% is a drastic improvement over last November's (2015) growth rate of 0.6%. The projected April-November 2016 cumulative growth of 4.9% in the core sector is also higher than that of the corresponding period last year (2.5%).

Crude oil and natural gas showing in the red makes for some concern. It is high time India looks into opportunities to boost its contracting natural gas and crude oil production. This may well be the need of the hour as crude oil prices the world over are likely to rise, meaning India's dependency on crude imports must decline.

The news comes during a slowing economy affected by the tremors of demonetisation. The banking sector, especially the PSUs, which function as the credit lifeline of these capital-intensive industries, have deteriorated in their lending capabilities due to NPA-laden balance sheets. Given the odds the core sector is up against, it remains to be seen if our industries can shun the barriers in its external environment to continue growing post demonetisation.