International BusinessCore sector grows 6.5%
Impact of stimulus, says commerce minister
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Double-digit growth in coal and cement production saw the index of six core sector industries growing 6.5 per cent in June 2009 compared to 5.1 per cent last year. The sector grew at 4.8 per cent in the April-June quarter compared to 3.5 per cent for the same period last year.
The government was quick to attribute the increase to stimulus packages which it felt had started bearing fruit.
“It is gratifying to note that core sector industries have recorded growth during the last three months. June’s growth has been powered by improved production in cement, coal, crude oil and electricity. This is a clear indication that the economic stimulus packages are yielding results,” said Anand Sharma, minister for commerce and industry, on the sidelines of a Ficci conference.
The three stimulus packages, which extended fiscal reliefs to various sectors to pump demand, constituted around 3 per cent of the gross domestic product (GDP).
Sharma defended the government’s decision to continue with fiscal sops and increased government expenditure in the face of rising fiscal deficit which is estimated to be 6.8 per cent in the current fiscal.
STIMULATED
(Performance of six core industries in June) Base Year: 1993-94
Sector
Sector-wise growth rate (%) in production
Weight*
Jun ‘08
Jun ‘09
Apr-June
2008-09
Apr-June
2009-10
Crude oil
4.2
-4.7
4.0
-0.1
-1.3
Petroleum
refinery products
2.0
5.6
-3.7
3.3
-4.1
Coal
3.2
6.1
14.7
8.4
12.7
Electricity
10.2
2.6
7.0
2.0
5.8
Cement
2.0
6.6
12.8
5.8
12.1
Finished steel
(carbon)
5.1
10.4
5.3
4.3
3.2
Overall
26.7
5.1
6.5
3.5
4.8
Source: Office of Economic Advisor, Department of Industry
*In index of industrial production
He also added that the improvement in core sector figures does not indicate that the economy has fully recovered since exports continue to lag.
“The various incentives that we have given will remain in place as the export sector is still a cause of worry. More sops might be given in the foreign trade policy to come out in the second half of August,” Sharma added.