Core sector output dips to 5-month low of 3.6% in March

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Growth in India’s eight core sectors’ output fell to a five-month low of 3.6% in March from 7.2% in February, with electricity and cement production slipping from a year ago, and crude oil output falling for the tenth successive month.

Coal production jumped 12.2% in March, while fertilisers and steel output grew 9.7% and 8.8% respectively – relatively slower than recent months – as per data released by the Commerce and Industry Ministry on April 28.

For the full financial year 2022-23, core sectors recorded a 7.6% growth compared to 10.4% in 2021-22, with all sectors reporting higher production except crude oil, which shrank 1.7% during the year.

In March, growth in natural gas production was down to 2.8%, the lowest in three months, while refinery products grew at a four-month low pace of 1.5%.

Electricity and cement production drop

Cement output contracted 0.8% in March, breaking a persistent growth streak in the previous four months. Electricity generation dropped for the first time in at least a year, shrinking 1.8% in March. However, absolute output levels in both these sectors were significantly higher than February – with the cement production index at its highest point since April 2022 and electricity output at it highest since September 2022.

Also read: Core sectors grew 7.4% in December; fastest pace in 3 months

“The final growth rate of the Index of Eight Core Industries for December 2022 is revised to 8.3% from its provisional level of 7.4%,” the ministry said. It also revised February’s growth rate to 7.2% from 6% estimated earlier.

“Output of some of the sectors like electricity and cement is likely to have been dampened by the unseasonal rainfall in March,” reckoned Aditi Nayar, chief economist at rating firm ICRA.

With most available high frequency indicators weakening in March 2023 on a year-on-year basis, relative to February 2023, Ms. Nayar expects growth in the Index of Industrial Production (IIP) to slow to around 3% to 4% in the month from 5.6% in February. The eight core sectors constitute a little over 40% of the IIP.