Core sectors’ output rose 2.6% sequentially in May

Cement output soars 26.3% y-o-y, but is down 3.15% from April

Output from India’s eight core sectors grew 18.1% year-on-year in May, with all sectors except crude oil and natural gas registering double-digit growth. On a sequential basis, average output across the sectors was about 2.6% higher than in April.

Cement output surged 26.3%, compared with production in May 2021 when the country was in the grip of the second COVID-19 wave. However, in absolute terms, cement was the only sector to record a drop in output from April, declining 3.15%, as per the index of core industries.

Coal production jumped 25.1%, followed by fertilisers (22.8%) and electricity, which grew 22%. Refinery products and steel products grew 16.7% and 15%, respectively, while crude oil and natural gas output saw upticks of 4.6% and 7%, respectively. 

Rating agency ICRA termed the 18% growth rate ‘optically misleading’ as it was boosted by the low base of the second pandemic. 

“In sequential terms, the uptick was modest across the core sectors, other than the sharp 31% spike in fertiliser output ahead of the kick-off in kharif sowing, whereas cement output dipped by 3%,” the rating agency’s chief economist Aditi Nayar said. 

Compared with pre-COVID levels, the core index registered a growth of 8.1% in May, led by all the constituents except crude oil. Fertiliser, coal, cement and electricity output displayed double-digit expansions in May 2022 over the May 2019 levels.

The core industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP). Ms. Nayar expects the IIP to expand by 16%-19% in May.