Economy & Market
Core sector output declines for 8th consecutive month
The eight-core sector output, which had seen a sharp improvement in recent months, has contracted by 2.5 per cent in October 2020, registering eight consecutive months of decline in output. The core sector output has contracted by 5.5 per cent in the corresponding month last year. Despite the sharp improvement and double-digit growth seen in case of coal production and electricity owing to resumption of business activities, the decline has been on account of decline in output seen in case of refinery products (having the highest weight in the core index) and decline in steel output during the month.
The decline in output in core sector in October to some extent adds uncertainty to sustainability of the recovery process in the economy. Low base effect, to some extent has limited the downside in the overall growth. The growth in the core sector index has been revised for September 2020 to (-)0.1 per cent and (-)7.3 per cent for August 2020.
During April-October 2020, the core sector output has contracted by 13 per cent as against a positive growth of 0.3 per cent during the same period of FY20, which can be ascribed to the coronavirus pandemic induced nation-wide lockdown that brought production activities to a near standstill. All sectors barring fertilizers registered de-growth in industrial output during the first half of FY21. About 50 per cent of the sectors in the index have recorded double-digit negative growth during these seven months.
Key highlights:
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Coal production grew by 11.6 per cent in October 2020, its second consecutive month of double digit growth compared with a sharp decline of (-)17.5 per cent registered in the corresponding month last year. The notable growth in October is an indication of revival in demand for coal amidst resumption of industrial activities and higher thermal power demand. A negative base also supported the growth in coal production.
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Crude oil production contracted by 6.2 per cent in October 2020 compared with a negative growth of (-)6 per cent in September 2020 and (-)6.3 per cent in the corresponding month last year. This is the 35th consecutive month in which crude oil production has recorded a contraction. This fall in production can be ascribed to technical mishaps and closure of wells due to COVID-19.
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Natural gas production declined by (-)8.6 per cent in October 2020 compared with (-)10.6 per cent in the previous month and (-)5.7 per cent in October 2019. This is the 17th consecutive month of decline in natural gas production. This fall in production can be ascribed to restricted/no gas offtake by consumers and shutdown at consumers??end. E&P players are also not aggressively producing gas as the gas produced from local fields is at an all-time low.
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Refinery production, having high weightage in eight core, contracted sharply by 17 per cent in October and is the eighth consecutive month of decline in production. The capacity utilisation of refiners in October 2020 was 88 per cent compared with 105 per cent during October 2019.
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Output of steel sector fell to three-month low of (-)2.7 per cent as against a positive growth of 2.8 per cent in the last month. On the other hand cement production recorded its first positive growth of 2.8 per cent in October 2020 after declining for seven consecutive months. This improvement can be ascribed to resumption of institutional projects and housing construction activities.
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Output of fertilizers improved sharply by 6.3 per cent in October 2020 as against a flattish fall of (-)0.3 per cent in September 2020. This improvement is on account of robust restocking of fertilisers ahead of the rabi season.
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Electricity production rose further to eight-month high of 10.5 per cent in October 2020 compared with a low base of (-)12.1 per cent in October 2019. This improvement reflects higher industrial and business activity and a similar pattern is witnessed in coal as well.
CARE Ratings??View
Despite a low base and improvement in business activities amidst unlocking of the economy, the fall in core sector output in October does show some volatility on the production side. Further unlocking of the economy could push this growth into positive territory in the next month. However, certain localised curfews imposed in a few States could weigh on production activity to some extent. IIP growth for this month may be expected to be between -1 to 0 per cent.
Courtesy: CARE Ratings??Core sector: October 2020
ABOUT THE AUTHOR:
Sushant Hede, Associate Economist at CARE Ratings. He can be contacted at: sushant.hede@careratings.com | Tel: +91-22-6837 43406
Disclaimer: This report is prepared by CARE Ratings Ltd. CARE Ratings has taken utmost care to ensure accuracy and objectivity while developing this report based on information available in public domain. However, neither the accuracy nor completeness of information contained in this report is guaranteed. CARE Ratings is not responsible for any errors or omissions in analysis/inferences/views or for results obtained from the use of information contained in this report and especially states that CARE Ratings has no financial liability whatsoever to the user of this report.
14th RAHSTA (Roads and Highways Sustainable Technologies & Advancement) Expo – India’s biggest road exhibition – will be held as a part 10th India Construction Festival 2024 at Jio Convention Centre, Mumbai, from October 9-10, 2024.
April 10, 2024, Delhi
“The RAHSTA expo will offer extensive information about the latest technology and methods for constructing high-quality roads. Currently, the challenge facing the roads industry is to uphold road quality and execute projects efficiently. RAHSTA will provide opportunities for everyone to learn about the latest worldwide technologies and equipment available, undoubtedly offering valuable insights to those involved in the roads sector,” said Vinod Kumar Yadav, Director – Transport, NCC, and former Chairman, Railway Board, while speaking during the launch of a road show – 14th RAHSTA Expo, which will be held from October 9-10, 2024, at Jio Convention Centre, Mumbai.
RAHSTA, which stands for Roads and Highways Sustainable Technologies & Advancement, is a dedicated event to the world of road construction equipment, technology, and sustainability.
“The Ministry of Road Transport & Highways has constructed 12,349 km of national highways in 2023-24 – the second highest achievement! In 2020-21 a record 13,327 kms had been constructed, the highest so far. The experience of a well-constructed road is no accident but a badly constructed one can cause many,” stated Pratap Padode, Founder, FIRST Construction Council, a pioneering infrastructure-driven council focused on advancing India’s infrastructure development.
Also speaking at the launch, former Managing Director of Ashok Leyland & JCB, Vipin Sondhi, also Chairman of RAHSTA Expo Committee underscored the need for specialised platforms like RAHSTA Expo for the burgeoning road construction industry.
Ashish Kumar Singh, CGM – Finance, National Highway Authority of India; RK Pandey, former NHAI member and Member of RAHSTA Expo Committee; SK Nirmal, Secretary General, Indian Roads Congress and Member of RAHSTA Expo Committee; Prof Satish Pandey, Principal Scientist, CSIR-Central Road Research Institute, Ministry of Science and Technology; Ankit Jain, CFO, Cube Highways Growth Advisors, Vijay Agrawal, Executive Director, Equirus Capital; and Subodh Dixit, Former Executive Director, Shapoorji Pallonji, participated in a round table discussion on the new BOT proposals.
The launch function at PHD Chamber for RAHSTA Expo was attended by who’s who of the infrastructure industry such Lt Gen Harpal Singh, President, International Road Federation and former Engineer-in-Chief, Indian Army; Akhilesh Srivastava, Road Safety Ambassador, International Road Federation; Sandeep Singh, Managing Director, Tata Hitachi Construction Machinery; Rajesh Menon, Director General, Society of Indian Automobile Manufacturers; Raman Kapil, President, Tata Projects; Anand Sundaresan, Director, Ammann India; Dheeraj Panda, Managing Director, Ammann India; Rajan Aiyer, Managing Director, Trimble; Satin Sachdeva, Founder & Secretary General, Construction Equipment Rental Association; Dr Swamy, Chairman, The Institution of Civil Engineers and Dr Ranjeet Mehta, Executive Director of PHDCCI, among others.
Organised by the FIRST Construction Council, the RAHSTA Expo 2024, which will be held as part of 10th India Construction Festival, will bring together industry leaders, innovators, and stakeholders for two days of exploration, collaboration, and transformation.
Besides RAHSTA Expo 2024, the India Construction Festival 2024 will include the following:
- 14th India RAHSTA(Roads) Conference
- 12th Equipment India Awards
- 22nd Construction World Global Awards
Exhibitors can use RAHSTA Expo 2024 to showcase their construction machinery, building material machines, mining machines, and construction vehicles to a targeted audience of industry professionals. RAHSTA Expo will be an ideal platform to connect with key decision-makers, generate leads, and grow business in this rapidly expanding market.
Contact:
For exhibitor enquiries (for RAHSTA Expo), contact Mr Sujoy on Mob: +91 86577 95881, or Email: sujoy.g@asappinfoglobal.com
For delegate enquiries (for conferences), contact Mr Amar on Mob: +91 86524 93000, or Email: delegate1@asappinfoglobal.com
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