Core sector grows 7.2% in March

NEW DELHI: Core sector industries expanded by 7.2% in March, indicating strong industrial growth for the month and a pickup in investment activity. The six industries — crude production, petroleum refinery products, coal, electricity, cement and finished steel — have a combined weight of 26.7% in the index of industrial production. The core sectors had grown by 3.3% in March 2009. “I expect it (core sector growth) to reflect in the IIP figures for March,” said Suresh Tendulkar, former chairman of Prime Minister’s Economic Advisory Council. The data comes almost 15 days ahead of the industrial production numbers. The strong performance, however , failed to cheer the stock market . On Tuesday, the Bombay Stock Exchange’s benchmark 30-share index closed 0.31% down at 17,690.62, breaking a five-day winning streak. The core sector registered a 5.5% growth for the 2009-10 fiscal year against 3% last year, an official statement said on Tuesday. The sectors had grown 4.7% in February. The overall industrial growth in that month came in at a strong 15.1%. Industrial production had risen at a 16-year high of 16.8% in December 2009. The strong performance was led by a 9.2% growth by the steel sector, indicating strong demand in the user industries such as cars and white goods. Robust demand has pushed steel prices sharply in the last few months, prompting the government to step in persuade the major producers not to hike prices in view of high inflation. The Reserve Bank of India has hiked policy rates in its April 20 monetary policy review. Interest rates are likely to move up in reaction to the RBI’s action but this happens with a lag. Higher interest rates could depress both demand for goods and also investment activity, which has a bearing on both the core sector and the industrial production. Sources : Economic Times