Core sector industries’ output grows 4.3 per cent in May

NEW DELHI:  The eight core sector industries slowed down to 4.3% in May as compared to the same month last year when this sector grew at 19.3%. The fall in output of crude oil, natural gas and electricity drag down the growth rate in May. However, in the previous month, the core sector growth rate was the same as in May.

According to government data, in the first two months of the current financial year, the core sector output growth has been 4.3% compared to 14.3% in the same period last year.  In 2022-23, the eight core sector industries registered a growth of 7.7%.

Cement output in May grew by 15.5% year-on-year (YoY), steel and fertiliser by 9.2% and coal by 7.2%. However, crude oil production declined by 2%, while natural gas and electricity output fell by 0.3% YoY.  The eight core industries comprise 40.27% of the weight of items included in the IIP.

Electricity generation registered a YoY decline for three months in a row. This, is despite the fact that summer kicks in in April. So far in the first two months of the financial year, electricity generation has declined 0.7% as compared with a growth of 17.4% in the previous year. Experts say this could be because of rains in different parts of the country in April and May.

The core sector output declined to a five-month low of 3.6% in March. “Although the y-oy growth in core output remained steady, the performance of a majority of the available high-frequency indicators improved in May 2023 relative to April 2023,” says Aditi Nayar, chief economist, and head of research & outreach, ICRA Ltd.

Consequently, ICRA expects the y-o-y index of industrial growth (IIP) growth around 4-6% in May 2023.
The growth of these eight industries hit a new low of 3.6% in the month of March 2023 as compared to 7.2% in February on account of rainfall and the high base effect.