Core sector output contracts in March on West Asia war

NEW DELHI: Amidst the conflict in West Asia, output in India's eight core infrastructure industries contracted 0.4% in March, the first since last Oct, as four of the sectors registered a decline in production during the month, latest official data released Monday showed.

Fertiliser output (-24.6%) saw the steepest contraction in March as plants went for early maintenance shutdowns due to gas shortage, following the blockade of the Strait of Hormuz, the key gateway for Indian energy supplies.
While crude oil output remained in contraction mode (-5.7%) for the seventh consecutive month, coal production fell 4%, the first fall in five months, while electricity generation was lower by 0.5% on the back of a high base effect. Natural gas production, however, rose first time in 20 months, clocking 6.4% growth in March. Besides, output in steel (2.2%) and cement (4%) sectors decelerated during the month. Refinery products which have the highest weight (around 28%) in the index registered a meagre 0.1% growth. The eight core sectors constitute 40.3% of the Index of Industrial Production (IIP), which measures output in the country's industrial sector. The conflict in West Asia is expected to have weighed heavily on the industrial sector, which had earlier seen an uptick in output to 5.2% in Feb. The data for March will be released on April 28.

Icra chief economist Aditi Nayar, said a shortage of inputs amidst the ongoing West Asia crisis curtailed fertiliser output, which plunged to unprecedented levels. "Growth in steel and cement output weakened, suggesting that construction activity slowed in the month. Given these trends, IIP growth is expected to slow to 1-2%," she said.



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