Dip in production of finished steel, natural gas, crude oil and refinery items
GN Bureau | April 1, 2015
India enters new financial year with a bit of bad news on economic front. Latest figures show that the core-sector output grew at 1.4%, the slowest pace in 16 months, in February and that the direct tax collection target is going missed.
Except for coal production, the core sector has been hit due to dips in production of finished steel, natural gas, crude oil and refinery items. This raises concern over the pace of industrial recovery and there is a possibility that the last quarter GDP growth could be a bit less than 7.4%. The economy grew by 6.5% in Q1, 8.2% in Q2 and 7.5% in Q3.
The expansion of the eight core-sector industries was also subdued in January at 1.8%. The February growth in eight core-sector industries, which have a total weight of 38% in the index of industrial production, was the slowest after -0.1% growth reported in October 2013.
The steel output contracted 4.4% in February after growing 1.6% in January. Crude output shrunk by 1.9% in February, a trend observed since November 2014. Natural gas and refinery products output declined 8.1% and 1.0% respectively.
However, coal production jumped by 11.6% in February while cement and electricity production increased by 2.7% and 5.2% respectively.
Meanwhile, the government’s direct tax mop-up is set to miss the revised target for 2014-15, as the collection so far has been only Rs 6,30,000 crore.
The IT department may not be able to achieve even the revised target. The government had revised its target downwards to Rs 7,05,000 crore for the current financial year, after initially having budgeted Rs 7,36,000 crore in the direct tax mop-up.
The lower than projected target of direct tax collection is being attributed to certain sectors like manufacturing which have not been able to do well in the sluggish country's economic growth.
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