In February, the eight core infrastructure sectors—coal, crude oil, steel, cement, electricity, fertilizers, refinery products, and natural gas—had grown by 7.1%, hitting a three-month high.
According to ministry data, in FY24, production growth across the eight core industries stood at 7.5%, the slowest in three years.
While crude production declined month-on-month from 7.9% to 2%, natural gas production fell from 11.3% in February to 6.3% in March.
Natural gas was up by 6.3% while that of refinery products was down marginally due to lower growth in exports.
On a positive note, crude oil production has jumped into positive zone in FY24 for the first time since FY13.
In March, India's core infrastructure sectors, comprising 40% of industrial output, grew by 5.2%, but slower than the previous month, primarily due to lower crude oil production and contraction in refinery products and fertilizers, according to data released by the ministry of commerce and industry on Tuesday.
In February, the eight core infrastructure sectors—coal, crude oil, steel, cement, electricity, fertilizers, refinery products, and natural gas—had grown by 7.1%, hitting a three-month high. This figure was revised upward from the earlier estimate of 6.7%.
According to ministry data, in FY24, production growth across the eight core industries stood at 7.5%, the slowest in three years. However, FY24 outperformed most years of the Modi administration, barring FY22 and FY23, when growth rates were at 10.4% and 7.8%, respectively.
The ministry reported that core sector growth stood at 4.2% in March 2023, benefiting from a lower base, and contributing to higher growth in the index during the month under review.
Downtrend
While refinery and fertilisers output contracted by 0.3% and 1.3%, respectively, in March, crude oil , natural gas and steel production also showed signs of slowing. While crude production declined month-on-month from 7.9% to 2%, natural gas production fell from 11.3% in February to 6.3% in March. Steel production also declined from 9.1% to 5.5% during the period under consideration.
However, electricity and cement sectors bucked the trend, with double-digit and high, single-digit growth, respectively.
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Power packed
In March, electricity (weightage of 18.75% in the index) drove growth in core industries' output, posting an 8% increase in production. Cement production surged 10.6% following a robust 9.1% growth in February, according to the ministry data.
Additionally, natural gas production expanded by 6.3%, coal by 8.7%, steel by 5.5%, and crude oil by 2%. Although both natural gas and steel production witnessed month-on-month decline, they remained in positive territory, indicating potential growth in the coming months.
The contraction in refinery products (-0.3%) significantly impacted the production index of the eight core industries, given its highest weightage of 28.04%. Refinery product growth remained moderate for much of FY24, spiking only in September and November.
“Fertilizers production witnessed a decline, considering this is a non-sowing season and beginning of harvest, when typically there is little demand. The energy basket of crude, gas and refinery products showed different tendencies. Natural gas was up by 6.3% while that of refinery products was down marginally due to lower growth in exports. Crude production was up by around 2%," said Madan Sabnavis, chief economist, Bank of Baroda.
“The core sector numbers can mean growth of 5-6% in Index of Industrial Production (IIP) for the month," Sabnavis added. Core sector output contributes 40.27% to the IIP.
Global developments also had a bearing on refinery products, considering its substantial share in exports.
For the full year, all core sector industries have registered decent growth barring crude oil which witnessed stagnant production (0.6%). On a positive note, crude oil production has jumped into positive zone in FY24 for the first time since FY13.
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