Demonetisation hits core industries output growth in November

eflecting some impact of the government’s recent demonetisation measure, the output of India’s eight infrastructure industries in November 2016 increased by 4.9 per cent, but fell sequentially as compared to the 6.6 per cent growth logged in October, official data showed on Monday.

The Eight Core Industries (ECI) grew in November at 4.9 per cent as compared to the same month of 2015 on the back of higher production of coal, steel and electricity.

The cumulative growth during April to November increased by 4.9 per cent.

The data which represents the output of major industrial sectors was released by the Ministry of Commerce and Industry.

The ECI comprises of nearly 38 per cent weightage of the items included in the Index of Industrial Production (IIP).

The index includes sectors like coal, crude oil, natural gas, refinery products, fertilisers, steel (alloy and non-alloy), cement and electricity.

Electricity generation, which has the highest weightage of 10.32 per cent in the IIP, edged up by 10.2 per cent in November, as compared with the corresponding month of 2015.

Steel production, the second most important component with weightage of 6.68 per cent, increased by 5.6 per cent in the month under review.

Distilling of refinery products, the third most important component as per weightage, was higher by 2 per cent in October, as compared with the corresponding month of last year.

However, extraction of crude oil, which has a 5.22 per cent weightage in IIP, decreased by 5.6 per cent during the month in consideration.

Coal mining, with a 4.38 per cent weightage, increased by 6.4 per cent in November.

Cement production, which has the weightage of 2.41 per cent, increased marginally by 0.5 per cent in November 2016 over the same month of 2015.

On the other hand, the sub-index for natural gas output, with a weightage of 1.71 per cent edged lower by 1.7 per cent during the month under consideration.

Fertiliser manufacturing, which has the least weightage of only 1.25 per cent rose by 2.4 per cent in November.

The impact of demonetisation was reflected in a downturn in Indian manufacturing growth in December, which was the first such contraction in a year, a key macro-economic data showed on Monday.

According to the Nikkei Markit India Manufacturing Purchasing Managers’ Index (PMI) — a composite indicator of manufacturing performance — the withdrawal of high-value banknotes has reportedly hit new business orders and factory output in December, with companies signalling fewer numbers of new orders, buying levels and output.

The index fell to 49.6 in December, from 52.3 in November, which marked the biggest month-on-month decline in the index since November 2008 when the global economy had slipped into a severe downturn following the financial market crash in the US.