India’s core sector output growth plummeted to a 14-month low of 3.8% YoY in December, as reported by the Ministry of Commerce and Industry. This sharp decline from the previous month’s 7.9% was attributed to a high base and a slowdown in six constituent sectors. Notably, only fertilizers (5.8%) and cement (1.3%) sectors saw an output acceleration in December.
Sectoral Analysis
- Fertilizers and cement recorded growth, while coal, natural gas, refinery products, steel, and electricity witnessed a sequential deceleration.
- Coal sector thrived due to increased mining for heightened winter power demand, while electricity slowed reflecting reduced industrial activity.
- Crude oil production contracted (-1%) for the second consecutive month in December.
Silver Lining and Projections
- Core sector output remained 18.9% higher than pre-Covid levels (February 2020) in December 2023.
- Infrastructure sector recovery persisted, with combined capital outlay of the union and 15 states growing 79.8% YoY to Rs 1.06 trillion.
- Despite the muted December growth, the April-December period recorded a 8.1% growth, slightly surpassing the previous fiscal year’s 8%.
Outlook
- With an unfavorable base, industrial output is anticipated to show muted growth (1-2%) in December, aligning with the moderation seen in core sector growth.
This data underscores the nuanced dynamics impacting India’s economic landscape, with government capex providing crucial support to the infrastructure sector.
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