NEW DELHI: Growth in India’s nine core sectors accelerated to a five-month high of 5 per cent in June from 3.2 per cent in May in the first print of a revamped Index of Core Industries (ICI) with a new base year of 2022-23, as sharp growth in iron ore, electricity and coal offset persistent weakness across the petroleum-based industries, according to data released by the Ministry of Commerce and Industry on Monday.
The reading marked the debut of a new series, which replaces the earlier 2011-12 series and widens the basket to nine sectors from eight with the addition of iron ore. Growth rates under the new base show an improvement compared with prints under the old base, with the May reading increasing from just 0.5 per cent to 3.2 per cent under the new series.
“The buoyancy has been added by iron ore,” said Madan Sabnavis, chief economist at Bank of Baroda.
The overall index stood at 119.6 in June, down from 120.1 in the preceding month.
Iron ore, which carries a weight of 4.9 per cent in the nine-sector index, surged 43.9 per cent in June over a contracting year-ago base, emerging as the single biggest driver of headline growth. Growth in this sector increased to its highest level compared with the April 2024 back-series data.
The rebasing exercise has substantially redrawn the weighting of the index. Electricity’s share has jumped to 30.9 per cent from 19.85 per cent under the old series, making it the highest-weighted sector, while petroleum refinery products — previously the heaviest at 28.04 per cent — have been pared to 22.6 per cent.
Electricity rose 9.8 per cent compared with 11.2 per cent in May, a touch slower than the previous month but still a major contributor to the headline number.
The weights of coal, natural gas and crude oil have been trimmed under the new series, while those of steel and fertilisers have remained broadly unchanged.
Data showed that five of the nine sectors registered positive growth during the month, with iron ore, electricity, cement, steel and coal in positive territory, while natural gas, crude oil, refinery products and fertilisers contracted.
Cement output rose to a five-month high of 9.8 per cent and steel grew at a 21-month low of 4.6 per cent, with Sabnavis attributing the strength in the two thrust areas to sustained spending by the private sector and the government.
Coal swung back into positive territory after three consecutive months of contraction, with growth of 1.4 per cent in June against a 9.5 per cent contraction in May. “Here the monsoon factor was in play when mining slows down,” Sabnavis reckoned.
The petroleum complex remained the principal drag. Crude oil output fell 4.2 per cent and natural gas contracted 7.4 per cent from a contraction of 5 per cent in May. The contraction in natural gas output was the steepest since April 2024.
While the decline in refinery products narrowed to 4.7 per cent from 8.2 per cent in May, fertiliser output contracted for the fourth straight month, slipping 3.3 per cent.
Rahul Agrawal, principal economist at ICRA, attributed the fertiliser slump to the continued adverse impact of the West Asia tensions.
Sabnavis said the negative growth across the crude-oil-linked sectors can be attributed to higher imports, with global crude prices cooling off. “Exports of refinery products had slowed down this month. In the case of fertilisers, imports tended to increase,” he added.
The core sectors constitute about 40 per cent of the Index of Industrial Production (IIP). Bank of Baroda expects IIP growth to be in the region of 3-4 per cent for June.
Cumulatively, the index grew 3.6 per cent during April-June 2026, compared with 1 per cent in the corresponding period a year earlier.
Source: Business Standard
