In view of the nationwide lockdown in May 2020, the eight core industries suffered a decline of 23.4 per cent in May 2020. However, this was still better than the 37 per cent fall seen in April 2020. During the first two months (April and May) of FY21, production of the eight core industries was down 30 per cent.
According to official statistics released by the Office of Economic Adviser on June 30, 2020, growth in the eight core industries, namely coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity , was -23.4 per cent (provisional estimate) in May 2020. The growth rate for April 2020 was revised to -37 per cent, as against -38.1 per cent estimated provisionally in the previous release.
These eight core industries account for 40.27 per cent of the weight of the overall Index of Industrial Production (IIP). As such, the performance of these eight core sector industries is considered as a forerunner for estimating overall industrial performance.
During the first two months of FY21, the core sector index was down 30 per cent, as against a growth of 4.5 per cent seen in the same period of FY20.
| Performance of Eight Core Sector Industries (% change over previous year) |
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| Sector | Weight (%)* | Weight in | FY17 | FY18 | FY19 | FY20 | April-May | |
| IIP (%)** | FY20 | FY21 | ||||||
| Coal | 10.33 | 4.16 | 3.2 | 2.6 | 7.4 | -0.4 | 2.4 | -14.7 |
| Crude Oil | 8.98 | 3.62 | -2.5 | -0.9 | -4.1 | -5.9 | -6.8 | -6.7 |
| Natural Gas | 6.88 | 2.77 | -1.0 | 2.9 | 0.8 | -5.6 | -0.4 | -18.3 |
| Refinery Products | 28.04 | 11.29 | 4.9 | 4.6 | 3.1 | 0.2 | 1.3 | -22.7 |
| Fertilizers | 2.63 | 1.06 | 0.2 | 0.0 | 0.3 | 2.7 | -2.6 | 2.0 |
| Steel | 17.92 | 7.21 | 10.7 | 5.6 | 5.1 | 3.2 | 13.3 | -63.3 |
| Cement | 5.37 | 2.16 | -1.2 | 6.3 | 13.3 | -0.9 | 2.5 | -54.1 |
| Electricity | 19.85 | 7.99 | 5.8 | 5.3 | 5.2 | 0.9 | 6.7 | -19.1 |
| Overall | 100.00 | 40.27 | 4.8 | 4.3 | 4.4 | 0.3 | 4.5 | -30.0 |
| *Gives relative weight of the sector within the Core Sector Index | ||||||||
| **Gives absolute weight of the sector in the Overall Index of Industrial Production (IIP) | ||||||||
It may be recalled that in FY20, the core sector had grown by just 0.3 per cent, thanks to year-on-year declines seen in four months of the year, including the partially lockdown-affected month of March 2020.
During the first two months of FY21 (April and May 2020), only the fertilizer industry could post positive growth. Production of fertilizers was up 2 per cent, while the remaining seven industries showed substantial declines. Steel and cement were worst hit, showing steep declines of 63.3 and 54.1 per cent, respectively. (see table). Electricity generation (including that from renewable sources) was down 19.1 per cent.
Given that the lockdown was progressively relaxed in June 2020, the core sector index for the month should show some improvement.
(Source for chart: Office of Economic Adviser, Government of India)
