Once again, the low-base effect has come into play. The Index of Core Industries (ICI) grew by 11.6 per cent in August 2021, the sixth straight month of above-average growth, thanks to the abnormally low growth rates in the same period of 2020.
ICI represented by eight core industries – coal, crude oil, natural gas, petroleum products, fertilizers, steel, cement and electricity – grew by 19.3 per cent in the first five months of FY22. This growth came over a low base as the ICI had declined by 17.3 per cent in the same period of FY21.
The highest growth was seen in production of steel and cement with year-on-year growth rates of over 44 per cent. Natural gas production was up 21 per cent while electricity generation was 15.2 per cent higher. Production of coal and petroleum products was up by around 12 per cent, while production of fertilizers declined by 1.5 per cent. All these growth rates, as indicated earlier, should be seen in light of the fact that production in the first five months of FY21 had declined considerably in the pandemic-affected economy.
The long-term performance of the eight core industries is summarized below:
Also read: Core Sector Performance: Low Base Results In High Growth
The eight core industries account for 40.27 per cent of the weight of the overall Index of Industrial Production (IIP). As the Index for Core Industries is released around ten days ahead of the overall IIP, the former serves as an advance indicator for judging overall industrial trends.