Core sector output growth spurts

India’s 8 core sectors have seen an increase in their output growth of 6.7% which is a three month high in February.

Crude oil production increased by 7.9% which is an all-time high growth rate due to the base effects.
Natural gas increased by 11.3% (highest in two years), cement, electricity, and coal production also witnessed significant growth.
This trend signals a reversal of the declining trend which was observed in previous months.
Due to this robust performance of core sectors, it is predicted that the Index of Industrial Production (IIP) will see an expansion ranging from 4% to 6.5% in February.
Altogether, the surge in output growth shows a broader economic recovery, contributing to boosting industrial output and investment in the coming months.

Source: The Hindu

It is the effect of the last year’s price level (last year inflation) over the corresponding rise in prices of the current year.
Example: If the inflation rate was low in the corresponding period of the last year, even a small increase in the price index will give a high rate of inflation in the current year.
The base effect could also lead to significant variations in percentage comparisons. Choosing a reference point that is too low could lead to overestimation, while selecting a base that is too high could result in substantial underestimation of the situation.

It is an index that shows the growth rates in different industry groups of the economy in a stipulated period of time.
It measures the industry groups classified under Broad sectors (Mining, Manufacturing, Electricity) and Use-based sectors (Basic Goods, Capital Goods, Intermediate Goods).
It is computed and published by the Central Statistical Organisation (CSO) under the Ministry of Statistics and Programme Implementation on a monthly basis.
Currently, the base year for IIP calculation is 2011-12.
It is used by the government agencies for Policy Making.

There are eight core sectors. They are Coal, crude oil, natural gas, refinery products, fertilizer, steel, cement and electricity.
They comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).
The eight Core Industries in decreasing order of their weightage: Refinery Products> Electricity> Steel> Coal> Crude Oil> Natural gas> Cement> Fertilizers.

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