NEW DELHI: India’s core sector growth eased to 5.2% in March from 7.1% in the preceding month as most infrastructure industries slowed, according to government data released Tuesday.
Sequentially, growth in the index of eight core industries that represent infrastructure output was up 9.9%. For FY24, core sector growth at 7.5% was lower than 7.8% in FY23.
“Core sector growth eased to 5.2% in March as the leap year effect faded, with five of the components reporting a flattening trend in the sequential months,” said Icra chief economist Aditi Nayar, referring to February’s 29 days in 2024.
The combined Index of Eight Core Sector Industries measures the output of cement, coal, crude oil, electricity, fertilisers, natural gas, refinery products and steel sectors. The index has a 40% weight in the Index of Industrial Production (IIP).
The moderation in core sector growth is likely to drag down industrial expansion as well. “Similar to the trend displayed by the core sector, IIP growth is likely to moderate somewhat in March 2024, as the leap year effect fades,” Nayar said. “We project IIP growth at 3.5-5% in March.”
Five of the eight industries slowed in March while fertilisers and refinery products reported a contraction. Cement was the only sector that saw strong double-digit growth, expanding 10.6% in March compared with 9.1% in the preceding month.
“The factors driving this growth are general industrial activity as well as infra push of the government,” said Bank of Baroda chief economist Madan Sabnavis.
Energy production gathered pace, expanding to a five-month high of 8% compared with 7.6% in February.
“Electricity generation displayed a healthy expansion in March 2024 and maintained a robust pace in April 2024, with rising heat likely boosting agricultural and household demand,” said Nayar.
But growth in coal slowed to 8.7% from 11.6% in the previous month.
Sabnavis further pointed out that subdued demand from the auto sector may be a cause for tempered steel growth of 5.5% in March compared with 9.1% in February.
Source: The Economic Times