The output of India’s core industries deteriorated once again in November, after recovering till September 2020. The infrastructure output had shrunk by 37.9 per cent in April, after which it gradually recovered to a contraction of a mere 0.1 per cent in October. However, in the last two months, the contraction once again widened at 0.9 per cent in October and 2.6 per cent in the month of November. Out of the eight core industries, production in five of them declined in the last month. These industries are crude oil, natural gas, refinery products, steel, and cement.
The production of crude oil fell 4.9 per cent, natural gas fell 9.3 per cent, refinery products fell 4.8 per cent, steel by 4.4 per cent, and cement fell 7.1 per cent in November 2020, according to the Ministry of Commerce and Industry. On the other hand, the production of coal, fertilizers, and electricity increased in the month. Coal production rose by 2.9 per cent, fertilzers rose by 1.6 per cent, and that of electricity increased by 2.2 per cent in November.
The intensifying fall in the infrastructure output is witnessed at a time when the economy is believed to be recovering and the contraction in GDP growth is expected to narrow in the fiscal’s third quarter. The slow production in the core industries are indicative of low capacity utilisation, and slow demand.
Meanwhile, the core industries employ a major proportion of labour force, which is also affected due to slow production. In November 2020, employment fell by a significant 35 lakh, according to the Centre for Monitoring Indian Economy (CMIE). Cumulatively, employment has fallen by 40 lakh during these two months. At 39.36 crore in November 2020, employment is still about 1 crore short of what it was in the March 2020 quarter.