04 Oct 2017
Core sector has expanded by 4.9% in August, 2017 as against 2.6% in previous month. The robust growth rate in the core category was primarily driven by the coal and electricity production. Coal production (in IIP index) has recorded 15.3% growth in August, which is fastest in last three years. Similarly, electricity generation has recorded 10.3% growth and reached highest ever monthly generation of 115.7 million mwh during the reference period. Coal-based thermal electricity generation has increased by around 14.9% YoY in August and raise the demand for coal. This accounts for 75% in overall conventional source of energy in India.
Higher electricity generation is a positive sign for the economy when fall in GVA growth rate has been worrying the policy makers. The two recent major reforms (demonetisation and GST) by the central government have thrown the economy out of gear. However, SMERA believes that the economy is expected to recover soon with the support of strong macro-economic foundation.
Acceleration in non-food credit offtake and core sector production along with positive PMI index hints at an improvement in the economy. Therefore, industrial production is expected to post robust growth in coming quarters. This sector had drawn higher attention when growth of GVA has decelerated to 1.6% in Q1, FY18 from 6.1% in Q3, FY17.
Growth in core sector (YoY):
Source: Ministry of Commerce