Drastic decline in core sector output in September’19

Official data released yesterday that output from the eight core industrial sectors – which account for more than 40% weight in the Index of Industrial Production (IIP) – has declined by a drastic 5.2% in September 2019. The eight core sectors had expanded by 4.3% in September a year ago. This is the sharpest drop of the core sectors’ output in the 2011-12 series.

7 out of the 8 core sectors saw a decline in output with only Fertilizers registering a 5.4% increase in production. Extent of decline in the other core sectors are as below:

Such a dramatic fall in the principal core sectors’ output is likely to have an adverse impact on the September IIP as well. The credit rating agency ICRA expects the IIP to contract by 2.5-3.5% in September. The June quarter GDP growth had fallen to a 6 year low figure of 5.0%. Economic observers are concerned looking at the performance of the core sectors about the September quarter GDP performance.

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