India's core sector growth rises to 6.1% in July, shows govt data

Compared to July 2023, six sectors recorded a decline in output growth. The growth rate in coal (6.8 per cent) was the lowest in 13 months

Growth in India’s eight core sector industries slowed to 6.1 per cent in July compared to 8.5 per cent in the same month last year, according to government data released on Friday.

It picked up compared to 5.1 per cent last month, helped by business activity and road construction.

“Despite an unfavourable base effect, the core sector output grew better than the previous month,” said Paras Jasrai, senior economic analyst at India Ratings and Research.

The first four months of FY25 recorded a 6.1 per cent growth compared to 6.6 per cent in the same period last year, according to the data from the Ministry of Commerce and Industry.

The core sector comprises coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity.

Increase in the growth rate of four sectors — refinery products, fertilisers, steel and cement, was higher than June.

“Pick up in growth is still skewed, led by only these four sectors, which account for 54 per cent share in the infrastructure segment,” said Jasrai.

Compared to July 2023, six sectors recorded a decline in growth output. The growth rate in coal (6.8 per cent) was the lowest in 13 months.

Other sectors such as crude oil (-2.9 per cent), steel (7.2 per cent), cement (5.5 per cent), electricity (7 per cent), and natural gas (-1.3 per cent) also recorded a decline in growth rate from the corresponding period last year.

“Infra activity on the government side picked up, which resulted in steel and cement growing. This came over high base year growth rates,” said Madan Sabnavis, chief economist, Bank of Baroda.

“Post election, there has been a pick up in road construction in particular. The good performance of housing and auto also added to the demand for steel,” he said.

The fertiliser and refinery sectors grew to 5.3 per cent and 6.6 per cent, respectively.

Growth in fertilisers indicates that companies are building stocks for both kharif and rabi seasons, said Sabnavis.

“Higher refinery products growth can be attributed to higher industrial activity as well as exports,” he added.

According to India Ratings estimates, the core sector growth will be around 3 per cent in August.

The core industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP).

In June 2024, the growth in IIP was at a five-month low of 4.2 per cent. It was 4 per cent in June last year.

“Industrial production may be expected to grow at a steady rate in July and would be around 6 per cent,” said Sabnavis.