Core Sector Growth Slows to 6.3% in May 2024

In May 2024, growth in India’s core sector industries decelerated to 6.3% from 6.7% in April, driven by varied performance across sectors. Coal and electricity saw accelerated growth due to increased demand during a heat wave, while sectors like cement and fertilizers contracted. Factors such as reduced capex, adequate fertiliser stocks, and lower diesel demand influenced sectoral output. The overall impact of these dynamics reflects on the Index of Industrial Production (IIP), expected to print between 4-5% for May 2024.

Sectoral Performance in May 2024

  • Coal and Electricity: Growth accelerated (10.2% and 12.8% respectively) due to heightened power demand.
  • Crude Oil and Refinery Products: Witnessed low growth (negative for crude oil) amid decreased diesel demand.
  • Natural Gas, Steel, Cement: Saw varied performance with deceleration in output growth rates.
  • Fertilizers: Contracted (-1.7%) due to ample stocks for the kharif season.

Economic Insights and Outlook

The core sector, comprising eight key industries, holds significant weight in the IIP, impacting broader industrial output trends. While growth remained above 6% for the fourth consecutive month, factors like the heat wave and phased elections may have curtailed activity in certain sectors, influencing overall industrial performance.

Piyush Shukla

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