India's core sector output sees 6.2% growth in April, shows govt data

The eight sectors-coal, steel, cement, fertilisers, electricity, natural gas, refinery products, and crude oil-comprise two-fifths of India's total industrial production

The output of India’s eight key infrastructure industries expanded 6.2 per cent year-on-year (Y-o-Y) in April, aided by robust growth in sectors such as steel, electricity and natural gas.

In comparison, the growth in output was 4.6 per cent in April 2023. However, growth in these industries was revised to 6 per cent in March, up from the government’s earlier estimate of 5.2 per cent, data released by the Department for Promotion of Industry and Internal Trade (DPIIT) showed.

The eight sectors — coal, steel, cement, fertilisers, electricity, natural gas, refinery products, and crude oil — comprise 40 per cent of India's total industrial production. As a result, they have a significant impact on the index.

Barring fertiliser, the remaining seven sectors witnessed a positive growth. However, in some of them, the high growth came on the back of a low base.

Similarly, while fertiliser output witnessed a degrowth of 0.8 per cent, it was mainly due to a high base. Fertiliser output grew 23.5 per cent in April last year.

“April has been the time when there has been less focus on spending by the government given the ongoing elections. Hence, the numbers must be read with caution,” said Madan Sabnavis, chief economist at Bank of Baroda.

Production of coal, crude oil, natural gas, refinery products, steel, cement and electricity witnessed 7.5 per cent, 1.6 per cent, 8.6 per cent, 3.9 per cent, 7.1 per cent, 0.6 per cent and 9.4 per cent growth, respectively, in April, as compared to the same period a year ago.

Although the cement sector saw marginal but positive growth in April, on a sequential basis, output witnessed 12 per cent contraction.

According to Aditi Nayar, chief economist at ICRA, the decline in cement output growth in April partly reflects a high base, and could also be dampened by some slowdown in government capex during the Parliamentary elections.

“The steel sector, however, displayed a healthy 9.4 per cent rise in April 2024, which may be driven by consumer durables,” Nayar said.

“Although the core sector in April was 19.8 per cent higher than the pre-Covid levels (February 2020), the trend was not uniform across all the sectors. The output of coal, crude oil, refinery products were up by just 1.3 per cent, 0.9 per cent and 7 per cent than the pre-Covid level respectively. This suggests the long catch up they have to do for sustained broad-based recovery,” said Sunil Sinha, principal economist at India Ratings and Research (Ind-Ra).

According to Ind-Ra, the pickup in the core sector in April will provide support to the overall industrial output. It expects the index of industrial production (IIP) to grow at around 5 per cent year-on-year (Y-o-Y) in April.