Core sector growth dips to five-month low of 3.6% in March

While the output of coals, fertilizer, steel, natural gas and refinery products grew during this period, the output of crude oil, cement and electricity declined.

"The combined Index of Eight Core Industries (ICI) increased by 3.6 percent (provisional) in March 2023 as compared to the Index of March 2022. The production of coal, fertilizers, steel, natural gas and refinery products increased in March 2023 over the corresponding month of last year," an official release said.

The index of eight core industries measures combined and individual performance of production of eight core industries viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity. It accounts for 40.27% of the weight of items included in the Index of Industrial Production (IIP).

"The core sector output has grown at a CAGR of 3.6% since FY20 underlying that a sustained recovery is still some distance away. With the weakening global and domestic demand, Ind-Ra believes that the growth in infrastructure industries would be under pressure in the ongoing fiscal year. As a result, the agency expects the core sector annual growth in FY24 at around 5%," said Dr Sunil Sinha, Principal Economist, India Ratings and Research.

The data showed coal production increased by 12.2% in March, 2023 over March, 2022 while crude oil production declined by 2.8% during the same period.

Output of natural gas, petroleum refinery products and fertilizers increased by 2.8%, 1.5% and 9.7% respectively in March 2023.

While steel production increased by 8.8% year-on-year in March, cement production declined marginally by 0.8% during this period. Electricity generation declined by 1.8% last month.

Commenting on March core sector data, ICRA Chief Economist Aditi Nayar said, "The halving in the YoY core sector growth to a five-month low of 3.6% in March 2023 from 7.2% in February 2023, was fairly broad-based, with only coal and crude oil displaying a sequential improvement."

She further said that dampened by a high base and heavy rainfall, the YoY performance of most of the available high-frequency indicators weakened in March 2023, relative to February 2023, similar to the trend in the core sector.

(With UNI inputs)