IIP growth reinforces economic turnaround, says India Inc

New Delhi: Growth of 5.8 per cent in the 8 core industries in August reinforces that economic turnaround is underway, although the coal sector’s performance may not sustain, industry body Assocham said today.

Performance of steel, cement, electricity and coal sectors is satisfactory and reinforces the turnaround of the economic activity in the factory output, it said.

“However, going forward, maintaining such a healthy growth in the coal sector now has become doubtful. The government needs to reallocate coal mines by formulating arobust and future proof policy,” Assocham Secretary General D S Rawat said.

[caption id=“attachment_84125” align=“alignleft” width=“380”]  Image: Thinkstock[/caption]

The Supreme Court earlier this month quashed allocation of 214 out of 218 coal blocks to various companies from 1993 impacted estimated investment of around Rs 2 lakh crore.

More from Economy

Inflation likely to be a big focus area for budget 2024, say sources Explained: Will the Bank of Japan break tradition and raise interest rates?

Rawat said: “Sustaining good performance of the core sector requires demand revival which, in turn depends on the credit policy and interest rates. The RBI must take note of the growth imperatives and suitably change its stand.”

Led by healthy growth in coal, cement and electricity sectors, the eight core industries grew by 5.8 per cent in August this year, as against 4.7 per cent in the same month last year.

Coal, cement and electricity grew by 13.4 per cent, 10.3 per cent and 12.6 per cent respectively last month, according to the Index of Industrial Production data released today.

Steel production expanded by 9.1 per cent in August this year, as against 8.1 per cent in August 2013.

However, production of crude oil and natural gas declined by 4.9 per cent and 8.3 per cent respectively. Refinery products and fertiliser sectors too recorded negative growth of 4.3 per cent and 4.3 per cent respectively.

During April-August, 2014-15, the eight sectors have grown by 4.4 per cent, against 4.2 per cent in the year-ago period.

The August figures would have positive impact on overall industrial production as the eight core sectors have a combined weight of about 38 per cent in the IIP.

PTI