Informist, Wednesday, Oct. 30, 2024

--India Sept eight core industries' growth at 2.0% vs -1.6% in Aug

--India Apr-Sept eight core industries' growth 4.2% vs 8.2% year ago

NEW DELHI – The output of India's eight core industries grew 2.0% on year in September after its worst performance in 42 months in August, data released Wednesday by the commerce ministry showed. A low base was instrumental in the quick reversal of fortunes of the headline number, as output had increased 9.5% in September last year.

For the first half of 2024-25 (Apr-Mar), core sector growth was at 4.2% compared with 8.2% in the same period of FY24.

The output of India's eight key infrastructure industries--coal, crude oil, steel, cement, electricity, fertilisers, refinery products, and natural gas--had contracted by 1.6% in August largely due to an unfavourable base effect. However, the effect turned sharply in September. In August 2023, the overall index had risen 3.5% month on month, before falling by an even larger 4.4% in September 2023 on a sequential basis.

After production contracted for six of the eight sectors in August, only three saw a decline in their output in September: crude oil (down 3.9%), natural gas (down 1.3%), and electricity (down 0.5%). Crude oil was the only one of the three which saw further weakening in production in September after it shrunk by 3.4% in August.

Among the risers, the biggest turnarounds were seen in coal and cement, with their output rising 2.6% and 7.1%, respectively, after contracting by 8.1% and 3.0% in August. Growth in production of refinery products also returned to positive territory, coming in at 5.8%. However, fertilisers and steel--the only two sectors to have seen growth in output in both August and September--saw a moderation in growth.

While the performance of the eight core sectors was better in September than the previous month, the mere 2.0% growth comes on top of a very favourable base effect. Additionally, it is the fourth consecutive month in which the overall index has fallen on a sequential basis. The last time such an event occurred was in Jun-Sept 2022.

An improvement in core sector growth in September bodes well for industrial growth as a whole, considering the eight core industries make up just over 40% of the Index of Industrial Production. In August, industrial growth had fallen below zero for the first time in 22 months, coming in at (-)0.1%. Data for September--which will be released by the statistics ministry on Nov. 12--as such, should show some improvement, particularly with the base effect turning favourable.

In September 2023, the IIP had declined 2.4% from the previous month.

The following tables give the year-on-year changes in the index of the eight infrastructure in September and Apr-Sept:

Source: Ministry of Commerce and Industry

End

Reported by Siddharth Upasani

Edited by Saji George Titus

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