Daily Current Affairs : 1-October-2024
In August 2024, India’s core sector output witnessed a significant decline, marking the first contraction in over three years. The core sector, which is a key indicator of industrial performance, experienced a 1.8% year-on-year drop in output, compared to a 6.1% growth in July. This downturn can be attributed to several factors, including seasonal disruptions, global economic uncertainty, and supply chain challenges.
Key Industries Facing Negative Growth
Several critical sectors showed negative growth in August 2024:
- Coal: The coal sector faced the steepest decline, with an 8.1% drop in production.
- Electricity: For the first time in 13 months, electricity generation contracted by 5%.
- Cement: Cement production also declined by 3%, marking its worst performance in nine months.
- Refinery Products: The refinery sector saw a 1% decline, the second fall in three months.
- Natural Gas: Natural gas output fell by 3.6%, continuing a second month of negative growth.
- Crude Oil: Crude oil production decreased by 3.4%, marking the third consecutive month of negative growth.
Modest Growth in Fertilizers and Steel
While many sectors struggled, there were some areas of growth:
- Fertilizers: This sector grew by 3.2%.
- Steel: Steel production increased by 4.5%, although this was the slowest growth in 26 months.
Reasons for the Decline
Several factors contributed to the overall decline in core sector output:
- Base Effect: The sharp contraction in August 2024 can be partly explained by the high base of 13.4% growth in August 2023, which made this year’s figures appear lower in comparison.
- Monsoon Impact: The late withdrawal of the monsoon disrupted coal production and electricity generation, significantly impacting industrial output.
- Global Economic Uncertainty: Ongoing challenges in the global economy affected demand, particularly for energy-intensive sectors like coal and electricity.
- Supply Chain Disruptions: Logistical bottlenecks, along with fluctuations in international markets for crude oil and natural gas, hampered the production of refinery products and crude oil.
- Seasonal Factors: The monsoon season typically reduces construction activity, leading to lower output in cement and steel sectors.
Background of the Index
The Index of Core Industries (ICI) is published monthly by the Office of the Economic Adviser under the Department for Promotion of Industry and Internal Trade (DPIIT). It covers 40% of the weight in India’s Index of Industrial Production (IIP) and serves as a crucial indicator of industrial health. The ICI uses 2011-12 as its base year for calculations.
Important Points:
- Overall Decline: India’s core sector output dropped by 1.8% in August 2024, the first contraction in over three years.
- Negative Growth in Key Sectors:
- Coal: Down 8.1%, the largest decline.
- Electricity: Decreased by 5%, the first fall in 13 months.
- Cement: Declined by 3%, the worst performance in nine months.
- Refinery Products: Fell by 1%, the second drop in three months.
- Natural Gas: Down 3.6%, marking a second consecutive monthly decline.
- Crude Oil: Fell 3.4%, continuing a third month of negative growth.
- Modest Growth:
- Fertilizers: Increased by 3.2%.
- Steel: Grew by 4.5%, though at the slowest pace in 26 months.
- Reasons for Decline:
- Base Effect: The decline is partly due to a high 13.4% growth in August 2023, making current figures appear lower.
- Monsoon Impact: Late monsoon withdrawal disrupted coal and electricity production.
- Global Economic Uncertainty: Economic challenges abroad impacted demand, especially for energy sectors.
- Supply Chain Disruptions: Logistical bottlenecks and fluctuating international markets affected oil and gas output.
- Seasonal Factors: Reduced construction activity during the monsoon impacted cement and steel production.
- Importance of the Index:
- The Index of Core Industries (ICI) is a key industrial performance indicator, covering 40% of India’s Index of Industrial Production (IIP).
- Published monthly by the Department for Promotion of Industry and Internal Trade (DPIIT) with 2011-12 as the base year.
Why In News
Output levels in India’s core sectors slipped to a nine-month low in August 2024, with year-on-year growth declining by 1.8%, marking the first contraction in three and a half years. This downturn signals growing challenges within key industries that are crucial to the country’s industrial performance.
MCQs about Trends in India’s Core Sector Output:August 2024
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What was the percentage decline in India’s core sector output in August 2024?
A. 3.2%
B. 1.8%
C. 6.1%
D. 5.0%
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Which sector experienced the largest decline in output in August 2024?
A. Cement
B. Coal
C. Electricity
D. Steel
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Which of the following sectors showed positive growth in August 2024?
A. Cement
B. Coal
C. Fertilizers
D. Crude Oil
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What is one of the main reasons for the decline in India’s core sector output in August 2024?
A. Increased construction activity
B. High base effect from the previous year
C. Increase in global demand
D. Higher crude oil production
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