India’s Core Sector Growth Picks Up with 3.1% Growth in October

India’s core sector growth improved to 3.1% in October, marking the second consecutive month of recovery. This growth comes after a revised 2.4% growth in September and follows a 22-month low contraction of 0.1% in August. The core sector, which includes coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity, accounts for 40% of the Index of Industrial Production (IIP). 

Key Highlights

Core Sector Growth

• The core sector registered a 3.1% growth in October, signaling recovery after a slump in August.

Sectoral Performance

• Coal, refinery products, and steel led the recovery, while crude oil and natural gas faced challenges.

Growth in Key Sectors

• Coal production grew by 7.8% YoY, reflecting increased output in key mining regions.
• Refinery products showed a growth of 5.2%, with steady capacity utilization.
• Steel production rose by 4.2%, bolstered by demand in construction and manufacturing.
• Cement output increased by 3.3%, while fertilisers showed marginal growth of 0.4%.
• Electricity Generation: Rose by 0.6%, but its cumulative increase remains modest at 5.3%.
• Crude Oil and Natural Gas: Crude oil production declined by 4.8%, and natural gas output dipped by 1.2%.

Cumulative Growth (FY25)

• For April–October 2024, the cumulative growth of the core sector stood at 4.1%, down from 8.8% during the same period in FY24.

Economic Outlook

• Economists expect India’s economy to gain momentum in Q3 and Q4 of FY25, driven by festive season demand and policy interventions. 
• The RBI forecasts GDP growth of 7.4% in the second half of FY25.