India's Core Sector Growth Hits Four-month High

Growth in India's eight core sectors spanning coal, crude oil, natural gas, refinery products, fertilizer, steel, cement and electricity hit a four-month of 3.2 percent in September after rising 2.6 percent in the same period last year.

The eight industries carry nearly 38 percent of the weight of items included in the Index of Industrial Production. While electricity generation scaled an 11-month peak, fertilizer production surged to its highest since February 2010 on a favorable base effect. Three key sectors -crude oil, steel and cement - saw contraction in the month, posting some concerns about economic momentum.

In the first six months of the current financial year, the core industries' output grew by 2.3 percent, down from the 5.1 percent seen in the year-ago period.

ICRA Senior Economist Aditi Nayar said that the pick-up in core sector growth in September was in conjunction with an inventory build-up ahead of the festive season. Madan Sabnavis, chief economist at CARE Ratings, said government spending has yet to get reflected in the numbers.

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