The six core industries in India observed growth of 6.8 per cent in the month of March 2021. While the economic recovery had just begun, but the second wave of coronavirus has marred all the hopes.
Industry department in a data, showcases growth and contraction in various infrastructures. As the output of coal (-21.9%), crude oil (-3.1%), refinery products (-0.7%), fertilizers (-5%) contracted, sectors like natural gas (12.3%), steel (23%), cement (32.5%) and electricity (21.6%) expanded in double digits. On the whole, the core industry contracted to 7 per cent in FY2021.
Meanwhile, Chief economist at Care Ratings, Madan Sabnavis says that growth for March and two consecutive months in core and industrial sectors were intended to be high.
This is because the mentioned sectors didn’t fall under the sharp declines of FY2020. He further added, “In fact March was just the beginning of the lockdown which pushed back economic activity after which there were even sharper declines.
Therefore, core sector growth of 6.8 per cent in March must be interpreted with caution. Also, this will be the theme in the next two months too.
Core sector and GDP growth for FY21
Year 2020 came as a huge crisis for the economic sector of the country. The impact of unprecedented pandemic lead to imposition of lockdown from March last year. The GDP rate declined to 23.9% in June quarter and the key industries contracted from from March to August of 2020.
Indian economy faced the most critical recession in FY21 with 8 per cent contraction. This was after the first wave of coronavirus pandemic swept the country.
The manufacturing, as well as service activity, faced huge losses in their respective centres.
Moreover, the worsening situation due to the second wave of coronavirus is obstructing the industries.
A revision conducted by Brickwork Ratings Tuesday sees its FY22 economic growth projection for India to 9 per cent from 11 per cent. It states that the expected projection of economic recovery might not happen as the second wave has put the country’s emerging growth on hold.
Rating agency Standard & Poor’s is also raising concerns over the coronavirus surge. It adds that, “This may prompt us to revise our base-case assumption of 11 per cent growth over fiscal 2021/2022. Particularly if the government is going to reimpose broad containment measures.