India’s core infrastructure sectors, comprising 40% of industrial output, witnessed a slowdown in growth in March, expanding by 5.2%, according to data released by the Ministry of Commerce and Industry. This growth rate was lower than the previous month’s 7.1%, which was revised upward from an earlier estimate of 6.7%. The eight core infrastructure sectors include coal, crude oil, steel, cement, electricity, fertilizers, refinery products, and natural gas.
In March, refinery and fertilizer output contracted by 0.3% and 1.3%, respectively, while crude oil, natural gas, and steel production also showed signs of slowing. Crude production declined from 7.9% to 2%, natural gas production fell from 11.3% to 6.3%, and steel production decreased from 9.1% to 5.5%.
However, the electricity and cement sectors bucked the trend, with double-digit and high, single-digit growth, respectively. 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.
Despite the slowdown in March, natural gas production expanded by 6.3%, coal by 8.7%, steel by 5.5%, and crude oil by 2%. The contraction in refinery products (-0.3%) significantly impacted the production index of the eight core industries, given its highest weightage of 28.04%.
For the full fiscal year 2023-2024 (FY24), all core sector industries registered decent growth barring crude oil which witnessed stagnant production (0.6%). Notably, crude oil production has jumped into a positive zone in FY24 for the first time since FY13.
The core sector output contributes 40.27% to the Index of Industrial Production (IIP), and the slowdown in core sector growth in March is likely to impact the overall IIP growth for the month. Global developments also played a role in the performance of refinery products, considering its substantial share in exports.