Infrastructure Output Down 1.3% In December, Shrinks For Third Straight Month

Infrastructure output declined for the third straight month in December 2020

Infrastructure Output in December 2020: The output of eight core infrastructure sectors contracted for the third month in a row by 1.3 per cent in December 2020, due to a decline in the output of crude oil, natural gas, refinery products, fertiliser, steel, as well as cement sectors. The core sectors expanded by 3.1 per cent in December 2019, according to the provisional data released by the Ministry of Commerce and Industry on Friday, January 29. Apart from coal and electricity, all the other sectors recorded negative growth in December 2020. During the April-December period last year, the output of the sectors declined by 10.1 per cent as compared to a growth rate of 0.6 per cent in the year-ago period. (AlsoRead: Industrial Output Snaps Recovery With 2.6% Contraction In Eight Core Sectors )

According to provisional data released by the Ministry of Commerce and Industry, the output of crude oil, natural gas, refinery products, fertiliser, steel and cement declined by 3.6 per cent, 7.2 per cent, 2.8 per cent, 2.9 per cent, 2.7 per cent, and 9.7 per cent, respectively. The growth in coal production declined to 2.2 per cent in the month under review from 6.1 per cent in the same month last year. However, electricity output grew by 4.2 per cent in December 2020. The eight core industries constitute 40.27 per cent of the Index of Industrial Production (IIP).

Commenting on the data, ICRA Principal Economist Aditi Nayar said that the core index continued to contract for the third consecutive month in December 2020. “Based on the plateau in the core sector data, juxtaposed with the uptick in auto production trends and recovery in non-oil merchandise exports, we expected the IIP to rebound to a modest growth of 0.5-1.5 per cent in December 2020, trailing the level seen in October 2020,” she said.

Meanwhile, the output of eight core sectors contracted by 2.6 per cent in November 2020, amid a decline in the prediction of crude oil, refineries, natural gas, steel, and cement. According to data released by the commerce and industry ministry on December 31, the production of the core sectors had registered a growth of 0.7 per cent in the corresponding month of 2019.