Decline in coal output drags core infrastructure growth to 2% in July

Core sector data released by the Ministry of Commerce and Industry on Wednesday showed that while infrastructure-based industries are doing well, energy segments have registered low-to-negative growth rates.

 

Overall, output growth in India’s eight core infrastructure industries remained muted in July at 2 per cent from an upwardly revised figure of 2.2 per cent in the previous month. This was on account of a high base effect and a decline in coal output. 

 

For the first four months (April-July) of the current financial year, growth stood at 1.6 per cent against 6.3 per cent last year. In July 2024, the Index of Core Industries (ICI) had risen 6.3 per cent.

 

Data showed that output in the coal sector (-12.3 per cent) during July declined further to its lowest level since June 2020.

 

Meanwhile, the output in crude oil (-1.3 per cent) remained in contraction for the seventh month in a row. And, output in refinery products (-1 per cent) turned negative for the first time in three months. 

 

However, buoyed by the government's capital expenditure, output in sectors like steel (12.8 per cent) and cement (11.7per cent) touched a 21-month high and four-month high, respectively.

 

“Only two sectors had a better year-on-year (Y-o-Y) growth than the core sector output in July 2025. These were namely steel and cement sectors, reflecting the impact of steady government capex. The improvement in growth of these sectors kept the core sector output from declining any further in July 2025,” said India Ratings associate director Paras Jasrai. 

 

The output growth of fertilisers and electricity sectors also improved to a four-month high of 2 per cent and three-month high of 0.5 per cent in July 2025, respectively.

 

Madan Sabnavis, chief economist, Bank of Baroda, said that core sector data for July is once again dualistic with the infra-based industries doing very well. But the energy segments registered low-to-negative growth rates. 

 

“In the oil complex, besides demand being low, there is also a correlation with global crude oil prices that have been stable in the $ 60-70/bbl. This is also indicative of slowing consumption of end products like petrol and diesel. It can be partly explained by the growing importance of EVs, especially in the passenger car segment,” he added.

 

The eight core sectors constitute 40.27 per cent of the Index of Industrial Production (IIP), which had fallen to a 10-month low of 1.5 per cent in June from an upwardly revised figure of 1.9 per cent in May. It was due to high base effect and a decline in the output of the mining and electricity sector.