Core sector output falls 0.4% in April; makes case for RBI rate cut

Core sector industrial production growth in the country extended a negative trend, growing at (-) 0.4 per cent in April against a growth rate of (-) 0.1 per cent in March 2015 and 1.4 per cent in February 2015, making a case for a lowering of interest rates.

The latest core sector data comes a day ahead of the Reserve Bank's scheduled monetary policy review on Tuesday where the central bank is widely expected to lower the key policy rates to boost the investment flows.

The index of core sector production fell on the back of a decline in production across sectors except coal, production of which increased by 7.9 per cent in April 2015 and steel, production of which increased by 0.6 per cent.

The eight core sector industries comprising coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity had grown at a faster pace of 4.2 per cent in April last year.

The index of core sector industries (Base: 2004-05=100), which has a weight of nearly 38 per cent in the general index of industrial production (IIP), has shown a cumulative growth of 3.6 per cent during April-March 2014-15.

Coal production, which has a weight of 4.38 per cent in the general index of industrial production, increased by 7.9 per cent in April 2015 over April 2014. Cumulative production of coal during April-March 2014-15 increased by 8.4 per cent over the corresponding period of the previous year.

Production of crude oil (weight of 5.22 per cent in IIP) declined by 2.7 per cent in April 2015 over April 2014.

Cumulative production of coal during April-March 2014-15 declined by 0.9 per cent over the corresponding period of the previous year.

Natural gas production (weight of 1.71 per cent in IIP) declined by 3.6 per cent in April 2015 while its cumulative production during April-March 2014-15 declined by 5.2 per cent over the corresponding period of the previous year.

Petroleum refinery production (weight of 5.94 per cent in IIP) declined by 2.9 per cent in April 2015. Cumulative refinery throughput during April-March 2014-15 increased by 0.4 per cent over the corresponding period of the previous year.

Fertiliser production (weight of 1.25 per cent in IIP) declined by 0.04 per cent in April 2015. Cumulative production of fertilisers during April-March 2014-15 declined by 0.1 per cent over the corresponding period of the previous year.

Steel production (weight of 6.68 per cent in IIP) increased by 0.6 per cent in April 2015 while cumulative production of steel during April -March 2014-15 increased by 0.8 per cent over the corresponding period of the previous year.

Cement production (weight of 2.41 per cent in IIP) declined by 2.4 per cent in April 2015 while its cumulative production during April-March 2014-15 increased by 5.7 per cent over the corresponding period of the previous year.

Electricity generation (weight of 10.32 per cent in IIP) declined by 1.1 per cent in April 2015 while cumulative production during April-March 2014-15 increased by 8.1 per cent over the corresponding period of the previous year.