Friday, 17 May, 2024
By: Yash Gupte
In August 2023 compared to the same month the previous year, more steel, coal, cement, refinery products, natural gas, fertilisers, and electricity were produced. Image Source: IANS
India registered record high cement production in the month of August 2023. The production of cement (weight: 5.37 percent) increased by 18.9 percent in August, 2023 over August, 2022. Its cumulative index increased by 12.7 per cent during April to August, 2023-24
According to the data released by the Ministry of Commerce and Industry, The combined Index of Eight Core Industries (ICI) increased by 12.1 percent (provisional) in August 2023 as compared to the Index of August 2022. In August 2023 compared to the same month the previous year, more steel, coal, cement, refinery products, natural gas, fertilisers, and electricity were produced. Coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity are the eight core industries that ICI tracks individually and together. The Eight Core Industries comprise 40.27 percent of the weight of items included in the Index of Industrial Production (IIP).
India’s GDP growth in the Q1 of the current financial year has brought cheers to the Indian market. According to figures released by the Ministry of Statistics and Programme Implementation on Thursday, August 31, India's gross domestic product (GDP) for the first quarter—that is, the April-June quarter of the current fiscal year accelerated to 7.8 percent. The GDP growth rate in the final quarter of the previous fiscal year was 6.1 percent.
Even though this is less than the 13.5 percent GDP growth in the first quarter of the previous year, India's economy has been expanding steadily and is anticipated to continue to do so throughout the upcoming festive season.
India registered record high cement production in the month of August 2023. The production of cement (weight: 5.37 percent) increased by 18.9 percent in August, 2023 over August, 2022. Its cumulative index increased by 12.7 per cent during April to August, 2023-24 over corresponding period of the previous year. Talking about the production of coal, (weight: 10.33 percent), it increased by 17.9 percent in August 2023 as compared to the same month in 2022. Its cumulative index increased by 11.5per cent during April to August, 2023-24 over corresponding period of the previous year.
Coming over to crude oil production, (weight: 8.98 percent), it increased by 2.1 percent in August 2023 as compared to the same period in the previous year. Though its production increased, the cumulative index declined by 0.4 percent during April-August 2023-24. In comparison to August 2022, electricity generation (weight: 19.85 percent) grew by 14.9 percent in August 2023. Compared to the same quarter the previous year, its cumulative index jumped by 5.3 percent during the period from April to August 2023-24.
Source: Ministry of Commerce and Industry
In comparison to August 2022, fertiliser production (weight: 2.63 percent) grew by 1.8 percent in August 2023. In comparison to the same period in the previous year, its cumulative index rose by 7.5 percent during the period from April to August 2023-24. The production of natural gas (weight: 6.88 per cent) increased by 10.0 percent in August, 2023 over August, 2022. Its cumulative index increased by 3.9 percent during April to August, 2023-24 over corresponding period of the previous year.
Petroleum Refinery production (weight: 28.04 per cent) increased by 9.5 percent in August, 2023 over August, 2022. Its cumulative index increased by 3.7 per cent during April to August, 2023-24 over corresponding period of the previous year. The production of steel (weight: 17.92 per cent) increased by 10.9 per cent in August, 2023 over August, 2022. Its cumulative index increased by 14.8 per cent during April to August, 2023-24 over corresponding period of the previous year.
Source: Ministry of Coal
Talking about the production of coal, India’s coal production increase by 8.4 percent to 223 MT in Q1 of FY2023-24. When compared to Q1 of FY 2022–23, when the overall coal production was 205.65 million tons (MT), it has significantly increased to 222.93 MT. Production at Coal India Limited (CIL) increased by an amazing 9.85 percent in FY 2023–2024, from 159.63 MT in the same time the previous year to 175.35 MT. In FY 23–24, captive mines/others saw an increase of 4.74 percent, reaching 30.48 MT, up from 29.10 MT in FY 22–23 over the same period. These successes have contributed to the industry's general upward trend. The Ministry of Coal has set a target of producing 1 billion ton of coal in FY2023-24, a 13 percent growth year-on-year. Recently, India added another feather to its cap as the FY 2022-23 recorded the highest ever domestic production of coal.
Source: Ministry of Coal
The Ministry of Coal reported a significant increase in overall coal production in August 2023, reaching 67.65 Million Tonnes (MT), exceeding the 59.95 MT of the same month the previous year, or an increase of 12.85 percent. With a surge of 13.21 percent, Coal India Limited's (CIL) production increased to 52.27 MT in August 2023 from 46.17 MT in August 2022. The Cumulative Coal Production (up to August 2023) has increased significantly in FY' 23-24, from 316.27 MT during the same period in FY' 22-23 to 349.01 MT (Provisional), a gain of 10.35 percent.
India has been eyeing to boost its steel production for a long period of time. Recently, the Union Minister for Steel and Civil Aviation, Jyotiraditya Scindia announced that India has emerged as the second largest producer of steel in the world. The government aims to double the country's annual crude steel making capacity to 300 MT from 125 MT at present. The production of steel in 2018-19 was recorded at 110.92 MT. The production had dropped to 103.54 MT in 2020-21. The reason behind the drop can be attributed to the pandemic which brought the whole nation to a standstill as nationwide lockdowns were imposed to contain the spread of COVID-19.
Source: Ministry of Steel
Among the states, Odisha is the largest producer of steel followed by Jharkhand and Chhattisgarh. Odisha produced 23.24 MT of steel in 2021-22. Jharkhand accounted for a total production of 17.09 MT followed by Chhattisgarh (14.90 MT). More than 80 percent of the country’s reserves are in the states of Odisha, Jharkhand, West Bengal, Chhattisgarh and the northern regions of Andhra Pradesh. Bhilai (Chhattisgarh), Durgapur (West Bengal), Burnpur (West Bengal), Jamshedpur (Jharkhand), Rourkela (Odisha), Bokaro (Jharkhand) are some of the important steel producing centres in India.
Coming over to crude oil, there has been a decline in the production of the commodity due ot various factors. One of the important factors is that India has been importing crude oil at very cheap rates from Russia and therefore it is very profitable and pragmatic for India to import the oil rather than produce it at a high cost. According to Hardeep Singh Puri, minister of petroleum and natural gas, profits for Indian Oil Corporation Limited grew from Rs 1,313 crore in 2019–20 to Rs 24,184 crore in 2021–20. Similar to this, the Bharat Petroleum Corporation Limited (BPCL) registered a profit of Rs 8,789 crore in 2021-2022 as opposed to Rs 2,683 crore and Rs 19,042 crore in 2020-21 and 2019-20, respectively. In just three years, Hindustan Petroleum Corporation Limited (HPCL) has seen a nearly threefold growth in earnings. The company's earnings increased to Rs 6,383 crore in 2021-22 from Rs 2,637 crore in 2019-20.
Source: Ministry of Petroleum and Natural Gas
Also, recently the windfall tax on domestically produced crude oil was raised by the central government on Friday from Rs 10,000 per ton to Rs 12,000 per ton. On September 30, 2023, the new rates will take effect. In the meantime, the government also made the decision to lower the windfall tax on the export of aviation turbine fuel (ATF) and diesel, from Rs 3.50 per litre to Rs 2.50 per litre, respectively. The center increased the windfall tax on crude oil in its most recent review, which was dated September 15, from Rs 6,700 per ton to Rs 10,000 per ton.
India produces less than one-fifth of its oil requirements and imports the rest. But even the meagre amount of oil produced in the nation is falling off every year. In 2014–15, India produced 37.5 million tons of its own oil, but by January 2021, that production had dropped to just 25.6 million tons. In the past, the government has attributed the decline in oil production on depleted fields and reservoir issues. However, there are a lot of additional factors causing the slide. According to a report by Care Ratings, the Covid-19 pandemic's technical disruptions, well closures, and delays in field development efforts are the reasons behind India’s declining crude oil production.
Aditi Nayar, chief economist at ICRA ratings agency said, "A truant monsoon helped to push up core sector growth to a robust 12.1% in August 2023, boosted by double-digit expansion in five of the eight components, except fertilisers, crude oil and refinery products, with the latter nonetheless recording a robust 9.5% increase. Given the uptick in the core sector growth, as well as healthy performance of high frequency indicators such as auto output, GST e-way bills, rail freight etc., we forecast the IIP to expand by 9-11% in the month of August 2023."
