Eight Core Sectors Growth hits 9-month low at 3.3% in August

The output of eight core infrastructure sectors grew 3.3 per cent in August the lowest in nine months as against 12.2 per cent in the year-ago period, according to official data released. The previous low was in November 2021 at 3.2 per cent. It stood at 4.5 per cent in July.

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About The 8 Core Sectors:

The production growth of eight infrastructure sectors — coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity — was 9.8 per cent during April-August this fiscal, compared to 19.4 per cent a year ago. Crude oil and natural gas production contracted by 3.3 per cent and 0.9 per cent, respectively, during the month under review.

In August, the fertiliser output rose by 11.9 per cent against a contraction of 3.1 per cent in the same month last year. The growth rates for coal, refinery products, steel, cement and electricity slowed to 7.6 per cent, 7 per cent, 2.2 per cent, 1.8 per cent and 0.9 per cent, respectively. Production of coal (weight: 10.33%) grew by 7.6% in August 2022 compared to August 2021. In comparison to the same time in 2022–2023, its cumulative index rose by 22.7% from April until August in FY23. Production of crude oil (weight: 8.98%) fell by 3.3% YoY in August 2022, and its cumulative index fell by 1.1% from April to August 2022–2023 compared to the same period in the previous year.

What The Economists Said:

Commenting on the data, ICRA Ltd Chief Economist Aditi Nayar said a normalising base and weak demand for electricity and construction activity during the heavy rains appear to have dampened the core sector growth in August 2022. “While the record high GST e-way bills were encouraging, the low core sector growth suggests that the IIP may record a mid single digit rise in August,” she added.

 Index of Industrial Production (IIP):

The weight of the items included in the Index of Industrial Production (IIP) is made up of the Eight Core Industries in 40.27 per cent. August 2022 saw an increase in the output of steel, cement, coal, refinery products, fertilisers, and electricity compared to the same month the previous year, according to official statistics issued by the Ministry of Commerce & Industry. Index of Eight Core Industries (ICI) measures the combined and individual performance of output in chosen eight essential industries, namely Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, and Electricity.

The Index of Eight Core Industries’ overall growth rate for May 2022 is adjusted from its initial reading of 18.1% to 19.3%. ICI’s growth rate from April through August 2022–2023 was 9.8% higher than it was during the same time period the previous FY, the official release of the Ministry of Commerce & Industry says.

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