Core sector growth in February slows to 6%, fiscal deficit at 83%
2 min read 31 Mar 2023, 10:53 PM ISTPoor show by core sectors will also impact industrial production data for the month.
PremiumIndia’s core eight infrastructure sectors expanded by 6% from a year ago in February, the slowest pace in the past three months, according to government data released on Friday.
This marks a deceleration from January’s 8.9% growth and a slight improvement from February 2022’s 5.9% expansion.
According to the ministry of commerce and industry data, growth was reported across all segments, barring crude oil. So far in FY23 (April-February), the eight infrastructure sectors—coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity—witnessed 7.8% growth against 11.1% in the year-ago period.
Production of coal rose by 8.5%, natural gas (3.2%), refinery products (3.3%), fertilizer (22.2%), cement (7.3%), and electricity by 7.6%. Crude oil production, however, declined by 4.9% in February 2023 from a year earlier.
Core sectors, or key infrastructure industries, which have 40.27% weight in the index of industrial production (IIP), will have a bearing on the industrial production data for the month.
Sunil Sinha, a principal economist at India Ratings, said the decline in crude oil saw the sharpest pace of contraction in 20 months. “Overall, it appears that the recovery is weak and losing momentum due to global economic uncertainty. The output of seven sectors stood higher than the pre-covid level (February 2020) in February 2023, down from eight in the previous month. Even on a month-on-month (seasonally adjusted) basis, output of the eight infrastructure industries declined 1.7% in February after a gap of three months," he added.
Although capital expenditure by the states and the union government will continue to witness strong growth, the spell of unseasonal rains could weigh on the cement and steel companies in March, he said. “The output of the coal sector is also expected to be affected by the unusual rains in the period. Therefore, Ind-Ra expects the core sector to slow further to around 4% y-o-y in March, which would take the annual growth for FY23 to a projected 7.4%."
India’s fiscal deficit for FY23 in April-February widened to nearly 83% of the target for the full year. According to data from the Controller General of Accounts, fiscal deficit, or the difference between expenditure and revenue collection in April-February, was at ₹14.53 trillion. Compared to a year-ago period, the deficit was 17% higher. In the union budget for FY24, the Centre revised its fiscal deficit target for FY23 from ₹16.61 trillion to ₹17.55 trillion.
Official data showed that the net tax collection in April-February was at over ₹17.32 trillion or 83% of the revised estimate for FY23. During the corresponding period of FY22, the collection stood at 83.9% of the revised estimates.
Total expenditure incurred by the central government was at ₹34.93 trillion (83.4% of the RE for 2022-23), out of which ₹29 trillion was in the revenue account and ₹5.90 trillion in the capital account.
Out of the total revenue expenditure, about ₹7.98 trillion was for interest payments, and ₹4.59 trillion was on account of major subsidies.
For the current financial year, the deficit target was kept at 6.4% of India’s gross domestic product. For the next financial year (FY24), the government has set a target of 5.9% of GDP.
