India's core sectors' output grew 4.6% in January, shows govt data

Output in India’s eight core infrastructure sectors, which constitute about 40% of overall industrial production, grew 4.6% in January, mildly slower than the upgraded 4.8% growth recorded in December but still the second highest uptick in six months.

 

On a sequential basis, however, the Index of Core Industries (ICI) was up 2.4% from December 2024 with a reading of 173, which marks a 10-month high and indicates the highest output level recorded so far in 2024-25. The core sectors had grown 4.2% in January 2024.

 

January’s growth was largely driven by a 14.5% surge in cement production and an 8.3% uptick in refinery products, reflecting the sharpest growth for both these sectors in at least 13 months. Coal output grew 4.6%, the slowest uptick in four months, while the other core sectors lagged the headline growth.

 

Fertilisers production was up 3%, a five-month high. However, crude oil production slipped back into contraction, with a 1.1% decline in January, the eighth dip in nine months. Natural gas output also slipped 1.5%, the seventh straight month of contraction. Steel and electricity generation grew 3.7% and 1.3%, respectively, reflecting the slowest growth in four months for both segments.

 

The Commerce and Industry ministry also revised upwards core sectors’ growth for October to 3.8% from the 3.1% growth estimated earlier, and November’s growth to 4.4% from 4.3% reported initially.

 

Bank of Baroda chief economist Madan Sabnavis said the 14.5% growth for cement compared to 4.1% last January, signals good demand from the real estate and roads segments. He attributed the muted electricity growth to lower business activity in January and the dip in crude oil and natural gas output to “supply side issues as well as higher imports”. The bank expects the Index of Industrial Production (IIP) to rise in the range of 4%-5% in January. 

 

Rahul Agrawal, a senior economist at ICRA, reckoned that the core sector trends suggest the IIP growth in January will be largely similar to the 3.2% uptick recorded in December 2024. The IIP numbers for January will be released on March 12.