India’s core sector growth shows signs of recovery at 3.1% in October
- This marked the second consecutive month of recovery in the performance of the eight core industries, according to commerce ministry data.
India’s core sector growth improved to 3.1% in October, marking the second consecutive month of recovery in the performance of the eight core industries, according to the data released by the commerce ministry on Friday. This comes after a revised 2.4% growth in September, providing a positive signal for the country’s infrastructure output.
The eight core industries—coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity—are a key indicator of industrial performance, accounting for 40% of the Index of Industrial Production (IIP).
The October growth follows a contraction to a 22-month low of 0.1% in August, highlighting signs of a gradual rebound. Industrial production also picked up in September, registering 3.1% growth, reinforcing hopes of recovery in the manufacturing sector.
Despite the recent uptick, growth in the core sectors during the first half of the current fiscal (H1FY25) stood at 4.2%, significantly lower than the 8.2% growth recorded in the same period last year.
Experts attribute the decline to a high base effect and weaker performance in sectors like crude oil and natural gas.
Read more: India to come up with mitigation action for high carbon-emitting sectors like steel, cement, refineries, fertilisers
Coal, refinery products, and steel led the recovery in October, driven by strong demand in the domestic market. However, crude oil and natural gas output continued to weigh on overall performance due to ongoing production challenges.
Cement and fertilisers showed modest gains, while electricity generation remained subdued, reflecting the mixed pace of recovery across sectors.
Economic outlook
Economists suggest that India’s economy is likely to gain further momentum from the third quarter onwards, supported by festival season demand and policy interventions. The Reserve Bank of India (RBI) anticipates an average gross domestic product (GDP) growth of 7.4% for the last two quarters of FY25, buoyed by improved industrial activity and resilient consumption trends.
“The recent improvements in core sector growth and industrial production indicate a stabilisation in the manufacturing and infrastructure sectors. However, sustaining this growth will depend on addressing sectoral bottlenecks, particularly in crude oil and electricity, while capitalising on government initiatives to enhance industrial output," said Abhash Kumar, assistant professor of economics at Delhi University.
The next core sector data release, scheduled for the end of December, will provide further insights into the trajectory of India’s industrial recovery.
Coal production rose by 7.8% year-on-year in October, supported by increased output in key mining regions. The sector’s cumulative growth for April–October 2024-25 stood at 6.2%.
Refinery Products showed a steady increase of 5.2%, reflecting improved capacity utilisation. Cumulatively, the sector grew 2.7% over the April–October period.
Steel production grew by 4.2%, with a cumulative rise of 5.9%, buoyed by strong demand from the construction and manufacturing sectors, the data showed.
As per the commerce ministry data, cement output increased by 3.3% in October, though its cumulative growth remained modest at 1.8%. Electricity generation rose by 0.6% during the month, contributing to a cumulative increase of 5.3%.
Read more: Mint Explainer: Why urban India is spending less
Fertilisers registered a marginal growth of 0.4% in October, contributing to a cumulative increase of 1.5% for the current fiscal year. The uptick is expected to gain momentum as production ramps up to meet the heightened demand for the rabi crop season, which commenced in November.
However, crude oil production fell by 4.8% year-on-year in October, reflecting challenges in upstream activities. Natural gas output also dipped by 1.2%, though its cumulative index for the April-October period showed a 1.5% growth.
From April to October 2024, the cumulative growth of the eight core industries stood at 4.1%, down from 8.8% in the same period last year. This moderation highlights slower growth in key sectors, particularly crude oil and natural gas, alongside a high base effect.
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Business NewsEconomyIndia’s core sector growth shows signs of recovery at 3.1% in October
First Published:29 Nov 2024, 07:17 PM IST
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