In a significant economic development, India’s core sector witnessed impressive growth in August, reaching a 14-month high of 12.1%. This remarkable surge in core sector performance is attributed to several key factors, primarily the favorable base effect. In this report, we delve into the details of this growth, including the sectors driving it and the broader implications for India’s industrial landscape.
August Core Sector Growth Surges:
- In August, India’s eight core industries experienced a remarkable growth rate of 12.1%, marking a substantial increase from the previous year when core sector growth was at 4.2%.
- This robust growth is a positive sign for the Indian economy, indicating a strong recovery and revival of essential infrastructure sectors.
Key Sectors Driving Growth:
- Five of the eight core sectors played a pivotal role in driving this growth: cement (18.9%), coal (17.9%), electricity (14.9%), steel (10.9%), and natural gas (10.0%).
- The production in coal and electricity industries witnessed its highest growth in 14 months, while cement and natural gas sectors saw their most significant growth in nine and 18 months, respectively.
- The refinery products sector also displayed substantial growth at 9.5%, a 14-month high compared to 3.6% in July.
- Crude oil output increased by 2.1% year-on-year, maintaining its upward trajectory from July. It had experienced a rise for the first time in 14 months during July.
- The only sector that saw a dip in output growth in August was fertilizers, with a growth rate of 1.8%, down from 3.3% in July.
- For the period of April to August, the core sector exhibited a growth rate of 7.7%. While this is a positive sign, it is worth noting that this growth is slightly down from the 10.0% growth observed in the first five months of the previous fiscal year (2022-23).
Revised July Figures:
- The growth figure for July was revised upwards from 8.0% to 8.4%, indicating a more robust performance than initially reported.
Significance of Core Sector Growth:
- India’s eight core sectors collectively account for more than 40% of the weight of the Index of Industrial Production (IIP).
- As a result, the performance of these core sectors serves as a leading indicator of overall industrial growth in the country.
- In July, India’s industrial output expanded by 5.7%, a five-month high, surpassing the consensus estimate of 5%, reinforcing the importance of core sector growth in assessing the broader industrial landscape.
Upcoming IIP Data:
- The Index of Industrial Production (IIP) data for August is scheduled for release on October 12. This data will provide further insights into the overall health of India’s industrial sector and its trajectory in the coming months.