Data Alert
India Aug core sector growth crashes to 42-month low of -1.8%
This story was originally published at 19:44 IST on 30 September 2024
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--India Aug eight core industries' growth at -1.8% vs 6.1% in Jul
--India Apr-Aug eight core industries' growth 4.6% vs 8.0% year ago
--India Aug core industries' growth lowest since Feb 2021
NEW DELHI – The output of India's eight core industries contracted by 1.8% on year in August from a growth of 6.1% in July, according to data released Monday by the commerce ministry. In August 2023, production of the eight core industries had grown 13.4% on year.
At (-)1.8%, growth in India's eight key infrastructure industries--coal, crude oil, steel, cement, electricity, fertilisers, refinery products, and natural gas--in August was the lowest in 42 months. The last time it had contracted by a larger margin was in February 2021, when it had come in at (-)3.3%.
For the first five months of 2024-25 (Apr-Mar), the output of eight core industries was higher by 4.6% compared with 8.0% in the same period last year.
The huge drop in core sector growth in August was largely due to an unfavourable base effect, with the overall index having risen 3.5% month on month in August 2023. This had pushed core sector growth to the highest since May 2022, when it had come in at 19.3%. Even now, the August 2023 core sector growth remains the highest since May 2022.
"A broad-based decline in six of the eight industries led to the core sector declining for the first time since February 2021," said Paras Jasrai, senior economic analyst at India Ratings and Research.
The deepest contraction in output was for coal, which was down 8.1%, followed by electricity (down 5.0%), natural gas (down 3.6%), crude oil (down 3.4%), cement (down 3.0%), and refinery products (down 1.0%). The fall in output of coal and electricity in August can be attributed to the progress of the monsoon, which would have helped reduce demand for power. Only the production of fertilisers and steel was higher in August on a year-on-year basis.
"The positive growth in steel production could be due to the inventory build by automobiles in view of the festive season. The capex of the general government also helped the production growth in the sector," Jasrai added.
A fall in core sector growth in August does not bode well for industrial growth as a whole, considering the eight core industries make up just over 40% of the Index of Industrial Production. According to Jasrai, industrial output in August--data for which will be released on Oct. 11--may shrink. Meanwhile, Bank of Baroda Chief Economist Madan Sabnavis sees industrial growth in August being "marginally positive" at 0.5%, while ICRA Chief Economist Aditi Nayar has pegged it at 1%. In July, industrial growth had come in at 4.8%.
The following tables give the year-on-year and month-on-month changes in the index of the eight infrastructure in August and Apr-Aug:
| Aug 2024 | Jul 2024 | Aug 2023 | |
| Coal | (-)8.1% | 6.8% | 17.9% |
| Crude oil | (-)3.4% | (-)2.9% | 2.2% |
| Natural gas | (-)3.6% | (-)1.3% | 10.% |
| Refinery products | (-)1.0% | 6.6% | 9.5% |
| Fertilisers | 3.2% | 5.3% | 1.8% |
| Steel | 4.5% | 6.4% | 16.4% |
| Cement | (-)3.0% | 5.5% | 19.7% |
| Electricity | (-)5.0% | 7.9% | 15.3% |
| Overall | (-)1.8% | 6.1% | 13.4% |
| Index for Aug 2024 | Index for Jul 2024 | Month-on-Month Change (in %) | |
| Coal | 138.2 | 163.0 | (-)15.2% |
| Crude oil | 75.7 | 76.6 | (-)1.2% |
| Natural Gas | 77.4 | 78.0 | (-)0.8% |
| Refinery products | 134.0 | 143.3 | (-)6.5% |
| Fertilisers | 137.5 | 138.8 | (-)0.9% |
| Steel | 207.4 | 204.0 | 1.7% |
| Cement | 176.5 | 175.2 | 0.7% |
| Electricity | 209.4 | 220.2 | (-)4.9% |
| Overall | 155.8 | 162.6 | (-)4.2% |
| Apr-Aug 2024-25 | Apr-Aug 2023-24 | |
| Coal | 6.5% | 11.5% |
| Crude oil | (-)1.7% | (-)0.4% |
| Natural Gas | 2.6% | 3.9% |
| Refinery products | 1.7% | 3.7% |
| Fertilisers | 1.7% | 7.5% |
| Steel | 7.3% | 16.1% |
| Cement | 0.7% | 12.9% |
| Electricity | 6.8% | 5.4% |
| Overall | 4.6% | 8.0% |
Source: Ministry of Commerce and Industry
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Reported by Siddharth Upasani
Edited by Akul Nishant Akhoury
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