Output growth in India’s eight core sectors hit a four-month high of 7.8% in January, quickening from 7% in December 2022, led by a sharp 17.9% year-on-year uptick in fertiliser production and double-digit expansions in coal mining and electricity generation.
The overall Index of Core Industries, which constitutes about 40% of the Index of Industrial Production (IIP), rose to its highest level in 10 months, with production rising 2.9% sequentially from December. Core sectors’ output had grown 4% in January 2022.
For the second successive month, all core infrastructure sectors except crude oil, registered growth in output from a year earlier. Crude oil production contracted 1.1%, marking the eighth month in a row that output shrank year-on-year. Fertilisers’ output surge was aided by base effects as it had contracted 2% in January 2022.
Steel and cement production grew 6.2% and 4.6%, respectively, in January 2023. However, this marked the slowest growth rate in three months for both the sectors. Refinery products and natural gas output recorded growth for the second month in a row, with the uptick accelerating to 4.5% and 5.3%, respectively.
“The 13.4% growth in coal and 12% rise in electricity is indicative of steady industrial activity during the month,” said Madan Sabnavis, chief economist at Bank of Baroda. “Higher power demand is also associated with high growth in the services sector too,” he added. Mr. Sabnavis expects IIP growth to be between 5% and 6% in January, compared with 4.3% in December.
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