Data released by the Ministry of Commerce and Industry on January 31 reveals that India’s eight core sectors experienced a growth of 3.8% in December. These crucial infrastructure industries include coal, crude oil, steel, cement, electricity, fertilisers, refinery products, and natural gas. However, this growth rate marks the lowest in 14 months.
In November 2023, the core sector growth was initially reported at 7.8%, but the commerce ministry revised this figure slightly upward to 7.9%. The output of these core sectors had demonstrated a robust 8.3% growth in December 2022. Despite the overall growth in April-December being consistent at 8.1% year-on-year, December’s performance was influenced by an unfavorable base effect.
The December figures for core sector performance are as follows:
– Coal output increased by 10.6%, compared to 10.9% in November.
– Crude oil output saw a decline of 1.0%, in contrast to a fall of 0.4% in November.
– Natural gas output increased by 6.6%, down from 7.6% in November.
– Refinery products output grew by 2.6%, a significant drop from 12.4% in November.
– Fertiliser output increased by 5.8%, compared to 3.4% in November.
– Steel output rose by 5.9%, a decrease from 9.4% in November.
– Cement output increased by 1.3%, rebounding from a 4.0% fall in November.
– Electricity output saw a modest growth of 0.6%, down from 5.7% in November.
Rajani Sinha, Chief Economist at CareEdge Ratings, noted the positive aspect of the improvement in cement output following the contraction seen in the previous month.
The slower growth in core sector output in December raises concerns about industrial growth, as these sectors constitute over 40% of the Index of Industrial Production (IIP). Economists anticipate muted industrial growth around 2%, considering the unfavorable base effect continuing into December. The official data on IIP growth for December is scheduled for release on February 12.