A sudden spike in oil production pushed production in all eight core sectors to an 11-month high of 5.5% in February, after January production was revised to 1.4%.
Production in the core sector contracted for four months until November, with a widespread decline affecting most sectors. As a result, production in the main sector during the period from April to February fell to 1%, compared to 4% the same period last year.
Production increased for the third consecutive month in February, mainly due to growth in refined products, as well as increased coal production and electricity production due to the start of summer. However, experts have pointed out that this will reverse in the coming months. “This upward trend should prove short-lived, with the March 2020 lockdown affecting production in all sectors,” said Aditi Nayar, senior economist at CIFAR.
Data from the Ministry of Commerce and Industry, released on Tuesday, showed that production of refined products increased 7.4% in February compared to 1.9% in January.
Although the sector showed a volatile trend during FY20, senior officials said that a solid recovery in production is underway as the main refining units, which were previously closed, became operational.
Crude oil production, however, continued its downward spiral, continuing its contraction sequence for 17 months. Production fell 6.4%, more sharply than the 5.3% in January. Experts believe that production is linked to oil prices and that a higher world value tends to make production more profitable.
Given that the price of a barrel of Brent crude oil was between $ 50 and $ 54 in February, compared to the current $ 24, crude oil production should continue to increase or make less losses.
Natural gas production also contracted for the 11th consecutive month, decreasing 9.6% in January.
Elsewhere, in the energy sector, coal production recorded the largest increase in production, up 10.3% from 6.9% the previous month.
The sector saw its contraction remain entrenched until November, after a 24-month growth period until July. With the majority of electricity production in India still based on heat, overall production increased by 11%, compared to only 3.2% in January.
The beginning of the year saw production growth after a sharp contraction for 5 months, the sluggishness of the manufacturing sector having led to a sharp drop in demand for electricity.
Today, the impact of social isolation and foreclosure should greatly reduce the immediate demand for electricity, according to experts.
The latest data indicates mixed results for the infrastructure segment. Steel production fell 0.4%, after falling 1.4% in January, but cement production increased 8.6%, taking advantage of the 5.1% increase in the previous month . Both sectors are experiencing volatility.
One month after the industrial slowdown caught up with the fertilizer sector, February’s production rebounded, albeit slightly. It rose 2.9% after slightly decreasing 0.1% the previous month.
Experts predict an increase in overall industrial production before the Covid-19 epidemic slows it down again. “The healthy growth of basic industries and the recovery in exports of non-petroleum goods should support industrial growth in February, despite the increasing contraction in automobile production. Overall, we expect industrial production to improve 2.5% in February, before sinking to a Covid-induced contraction in March, “said Nayar.
According to data from the Industrial Production Index, the contraction in the manufacturing sector had given way to a 1.5 percent increase in January. Manufacturing production fell 0.7% in December.