By Mrgya V
On 29 october,2020, the index of core industries was released by the office of economic adviser under the Department of promotion of industry and internal trade.
This index works as a keystone to portray an overall health of Indian economy as it comprises the basic/fundamental industries ( Coal,Natural Gas, Crude Oil, refinery products(such as petrol and diesel), fertilisers, steel, cement, and electricity) of India and it maps the volume of production in these industries. These industries are either directly or indirectly attached to most other Indian industries. So their health depicts the overall health of Indian economy.
The weightage of each of these industries is not the same and is given according to industries’ volume and influence on the economy of India. It can be inferred from the table that the largest weight is given to the Refinery products whereas that of the lowest to cement.
The statistics of the index shows that the core industries of India contracted 0.8% during the one year period( sep 2019 to sep 2020). If we analyse this one year period by breaking it into two halves , the index shows expansion in the first half(sep 2019 to feb 2020) and contraction in the second half(feb 2020 to sep 2020).
Now what this data is trying to tell us about the health of our economy.
The growth rate from april to september 2020 is -14.9% which is over the already shrinking economy of these industries. The most contraction happened in the weightiest sectors. Fertilizers is the only sector which has shown positive growth during this (april to sep 2020) period.
We can look at this data in another way also, if we compare the growth of sep 2019 to sep 2020, there appears a silver lining as the index contracts at 0.8% as compared to 5.1% that of last september. This silver lining glows brighter if we relook this data in the light of Covid-19 pandemic and associated lockdown.
It looks like the economy is trying to recover itself from the contraction of 37.9% in April this year to 0.8% in September this year.
If we look at the monthly data of the status of these core industries, we will find that three of them ( coal steel and electricity) are growing with positive growth rates. The other industries are also not contracting at a sharp rate except Natural Gas and Refinery Products.
It cannot be said that Indian economy has recovered itself from the crisis because for that we need to look at other dimensions as well but we can definitely say that we are seeing the green shoots of revival on the ground. The coming two quarters would be the defining ones.