Core sector growth falls to 6-month low
Production of electricity, refinery products, crude oil, and natural gas fell into the negative, marking the lowest core sector growth since the 0.7% growth recorded in October 2022
PremiumNEW DELHI : Output in India’s core sector industries slipped to a six-month low of 3.5% in April as production shrank in four out of eight sectors, official data released on Wednesday showed.
Production of electricity, refinery products, crude oil, and natural gas fell into the negative, marking the lowest core sector growth since the 0.7% growth recorded in October 2022.
Core sector growth stood at 9.5% in April 2022 and 3.6% in March 2023.
Electricity generation has the highest weightage of 19.85% in the core sector index.
“Electricity again clocked negative growth of -1.4%. This is on a higher base of 11.8%. But this is also reflective of a lower level of industrial activity that has brought down demand. Domestic demand would have varied due to extreme conditions witnessed in different parts of the country. Unseasonal rains did lower the need for cooling, while extreme heat did cause an uptick in demand," Madan Sabnavis, chief economist at Bank of Baroda, said.
The India Meteorological Department (IMD) had earlier said Delhi’s primary weather station, the Safdarjung Observatory, has not recorded any heatwave in the pre-monsoon season for the first time since 2014.
Sabnavis said crude oil, natural gas, and refined products witnessed negative growth, reflecting lower demand, adding that benign global crude prices have a tendency to lower production of domestic crude oil as imports are preferred.
Global crude oil prices have been declining amid recessionary conditions in several Western countries owing to the war in Ukraine.
Brent, the global oil benchmark, has corrected to near $70 a barrel from as much as $120 in 2022. Europe’s largest economy, Germany, entered a recession in the first quarter of 2023.
Cement grew by 11.6% in preparation for future demand, as there is a lull once the monsoon starts, Sabnavis added.
Meanwhile, coal production growth declined to 9% in April this year, and fertilizer production growth soared to 23.5%, steel by 12.1%, and cement by 11.6%.
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