Core sector growth slows to 13-month low of 1.8% in Jan

Tribune News Service & PTI

New Delhi, March 2

Growth in eight core industries slowed to 1.8% in January, the lowest in 13 months, which along with a slowdown in the manufacturing sector has raised hopes of a rate cut by RBI.

Negative growth in crude oil and natural gas and low growth in steel, cement and electricity have led to the dip in the overall growth rate of core industries.

The eight core sector industries — coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity — had expanded by 3.7% in January, 2014. The growth was 2.4% in December 2014. The data set was revised in January 2014 when the growth rate was 3.7% and the figures before that period are not comparable. The 1.8% growth in January 2015 is the slowest in the 13 months of the revised data. The core sector contributes 38% to the overall industrial production, a parameter that RBI takes into account while framing its monetary policy.

Production of crude oil and natural gas contracted by 2.3% and 6.6%, respectively, according to the data released by the Commerce and Industry Ministry. Output in steel, cement and electricity registered growth during the month under review, but the expansion is lower as compared to that in January 2014. As per HSBC India Purchasing Managers’ Index (PMI) — a composite gauge designed to give a single-figure snapshot of manufacturing business conditions — manufacturing growth slipped to a three-month low in January on slower pace of order flows from domestic and global markets. RBI may cut rates this week, say analysts Analysts on Monday said the RBI might cut key interest rates as early as this week, as the fiscal measures announced in the Union Budget were unlikely to disturb the “disinflation” trend. “We maintain our view that RBI will cut policy rates by 125 bps by the end of 2015 with the next move coming as early as this week,” Morgan Stanley’s Asia economist Chetan Ahya said. — PTI