Activities are slow in the infrastructure sector. There is no significant pace in both the cement and steel sectors.
The performance of the core sector in November (November 2021) has been disappointing. The core sector grew only 3.1 percent this month. This growth is a sign of a return to the old state after a slight pick-up in demand during the festival season. The core sector output growth in October was 8.1 percent. However, the growth of November 2021 will be considered good as compared to November 2020. In 2020, this growth had come down to 1.1 percent.
disappointing figures
According to the latest data, the growth of the coal sector in November was 8.2 percent. At the same time, the growth in natural gas was 23.7 percent. Refinery products registered a growth of 4.3 percent. The growth of fertilizer, steel and power sectors stood at 2.5, 0.8 and 1.5 per cent, respectively. The growth rate of the core sector was 13.7 per cent in the first eight months of the current financial year i.e. from April to November 2021. In the same period of the last financial year, the growth rate of eight core sector industries had registered a decline of -11.1%. Core sector industries include coal, crude oil, natural gas, refinery product, crude oil, steel, cement and electricity.
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Experts said, the government should increase capital expenditure
Commenting on the performance of the core sector, Madan Sabnavis, Chief Economist, rating agency Care Ratings said that despite the low base effect, the performance of the core sector has disappointed. It is clear that the activities in the infrastructure sector are slow. There is not much momentum in both the cement and steel sectors. This is not good for IIP growth and investment anywhere. He said the central government needs to increase capital expenditure, which is running below 49 per cent as compared to 58 per cent in last year’s budget.
Rating agency ICRA’s Chief Economist Aditi Nair says that the production of cement, crude oil and refinery products has dropped compared to November 2019.
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