Core sector growth at 3-month high, but remains subdued at 3.1% in Oct

Despite a high base effect, growth in the output of eight key infrastructure industries — known as the core sector — further recovered to 3.1 per cent (Y-o-Y) in October from an upwardly revised figure of 2.4 per cent in September.

 

In August, the output of the core sector had contracted (-1.6 per cent) for the first time in 42 months. In October 2023, the core sector had clocked 12.7 per cent growth.

 

According to the data released by the Ministry of Commerce and Industry on Friday, the sequential recovery was driven by the acceleration in the output of coal (7.8 per cent), steel (4.2 per cent), and electricity (0.6 per cent), even as the output of fertilisers (0.4 per cent), refinery products (5.2 per cent), and cement (3.3 per cent) decelerated.

 

On the other hand, the output of crude oil (-4.8 per cent) and natural gas (-1.2 per cent) contracted during the month.  

 

 

“The production of coal, refinery products, steel, cement, electricity and fertilisers recorded positive growth in October 2024,” said the commerce ministry in a statement.

 

Rahul Agarwal, senior economist at ICRA Ratings, said the performance of the constituent industries was mixed. While the growth in electricity generation improved marginally in October, it remained quite weak and continued to weigh upon the growth in core sector output during the month.

 

“Construction-related indicators reported mixed trends, with the growth in steel production improving, while that in cement output deteriorating between these months, although both remained muted,” he added. 

 

The eight core industries account for 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP), thus having a significant impact on the index. Following the slight recovery in the core sector in September, IIP also grew by 3.1 per cent during the month, buoyed by festival-driven demand. 

 

For the current financial year, growth in the output of core industries stood at 4.1 per cent compared to 8.8 per cent during the same period in the previous financial year. 

 

Meanwhile, national accounts data released on Friday showed that India’s GDP growth slumped to its lowest level in seven quarters at 5.4 per cent in the second quarter of FY25, compared to 8.1 per cent in the corresponding quarter of the previous financial year.