Core sectors’ growth slips to six-month low of 3.5% in April

Marking the slowest pace in six months with half of the sectors, India’s eight core sectors’ output growth slid from 3.6% in March to 3.5% in April

India’s eight core sectors’ output growth slid from 3.6% in March to 3.5% in April, marking the slowest pace in six months with half of the sectors, including electricity and natural gas, reporting a contraction.

Crude oil production shrank 3.5% in April, the 11th straight month of contraction. Natural gas output dropped 2.8% and refinery products plummeted 1.5% — the first such decline since November 2022 for both these sectors.

Cement, steel and fertilisers recorded a strong uptick to offset the declines in half of the sectors covered by the Index of Core Industries. Cement production bounced back from a 0.6% contraction in March to surge 11.6%, the fastest growth in five months.

Steel production grew 12.1% in April, the swiftest pace in three months, while fertilisers production accelerated 23.5%, marking the highest growth in over a year. Coal output rose 9%, a tad slower than the 12.2% growth in March 2023.

The Commerce and Industry Ministry, which released the data on Wednesday, has further revised upwards January’s core sectors growth rate to 9.7%, from its previous estimate of 8.9%. January’s seven-month high growth has lifted core sectors’ overall growth through 2022-23 to 7.7% from 7.6% estimated earlier.

In April 2022, the core sectors had reported a 9.5% rise in production levels, with all sectors except crude oil, clocking higher volumes. However, base effects alone did not appear to be responsible for the moderating growth this April, with output levels shrinking 8.55% from March 2023.

On a sequential basis, the only two sectors to report an uptick in production levels were electricity (up 2% in April from March), and fertilisers (0.5% over March). On the other hand, coal and steel output fell the most from March levels, dropping 31.9% and 7.3%, respectively.