The modest pace in the core sector has increased the pressure on the government. The pressure of fiscal deficit is increasing due to low income.
In December 2020, the core sector production grew by 0.2 per cent. In November 2020, it had fallen by 1.4 per cent.
Growth in power, steel and fertilizer sector
In January 2021, there was no significant pace in the production of core sector. Due to the slight pace, 0.1 percent growth was achieved. Cement and crude oil production were the worst affected. There was an increase in electricity, steel and fertilizers. Between April and January, the production of eight industries in the core sector declined by 8.8 percent in April-January. These eight sectors saw a growth of 0.8 percent in the same period last year. The eight core sectors account for 40.27 per cent in IIP.
Fear of further increase in fiscal deficit
Between April and December, the production of the entire core sector registered a decline of 10.1 percent. In the last one year, there has been positive growth in only one sector and that is the fertilizer sector. In the fiscal year 2020, the steel and cement sector faced a decline in production. Analysts say that there is no scope of increase in the production of core sector in the near future.
Corona infection has hurt many sectors. Meanwhile, the fiscal deficit of the Center has increased to 12.34 lakh crores. By the end of January in the financial year 2019-20, it had increased to 128.5 per cent of the revision estimate. In fact, the government’s income is continuously decreasing due to the decline in the core sector. Its effect is visible on the fiscal deficit.