What are ‘Index Core Industries’?
They are the eight most fundamental industries that have a major impact on the Indian Economy. This index maps the volume of production in these industries. These are major industries under IIP (Index of Industrial Production) and carry a weightage of 40.27 per cent out of all the industries. These industries are basic and/or intermediate elements in the functioning of the overall economy and support in mapping the health of the economy to understand its state. If these core industries are growing at a fast rate, then it is likely that the whole economy will also grow fast.
Refinery Products, Electricity and Steel hold the highest weightage.
Dissecting the Current Scenario of the Eight Core Industries
Index of Eight Core Industries (ICI) for September 2020, was released by the Office of Economic Advisor within the Department for Promotion of Industry and Internal trade on 29th Oct 2020.
What does the graph say..
- ICI contracted by 0.8 per cent in September 2020 as compared to September 2019. The index contracted by 14.9 per cent in terms of cumulative growth in the first half of the financial year i.e. between April 2020 and September 2020.
- The index fell to -8.6 per cent when the lockdown began in March 2020. Further, it fell to -37.90 in April 2020 amid the thick of the lockdown and then started picking up as the lockdown restrictions started easing out.
Observations from the Above Table
- Only steel and coal have shown positive growth rates in the month of September 2020. Coal has shown a steep spike with a growth rate of 21.2 per cent which is a good sign.
- The other core industries are also recovering except natural gas.
While all the above data aligns with growth in other variables such as growth in exports and an increased number of car sales in the month of September 2020, yet we must wait for a few months to get more conclusive data and then decide on which side is the economy bending.