Output from India’s eight core sectors increased by 2% in September, recovering from a 1.8% decline in August, according to the latest data released by the Ministry of Commerce & Industry on Wednesday. This growth came after output contracted in August, marking the first contraction in 42 months.
The data showed that production in September 2024 grew across the cement, refinery products, coal, fertilisers, and steel sectors. Notably, coal production, contributing 10.33% to the index, expanded by 2.6% year-on-year, while crude oil, with an 8.98% weight, declined by 3.9% compared to September 2023. Petroleum refinery production, which holds the largest share at 28.04%, rose by 5.8% YoY in September 2024.
Fertiliser output, which contributes 2.63% to the index, grew by 1.9% YoY in September 2024, with a cumulative increase of 1.7% from April to September 2024-25 compared to the same period last year. Steel output also grew by 1.5%, while cement production surged by 7.1% in September.
Electricity, which contributes 19.85% to the index, dropped by 0.5% YoY in September 2024, while natural gas declined by 1.3% YoY in September 2024.
The Index of Core Industries (ICI) tracks the combined and individual performance of these eight core sectors—namely, Coal, Crude Oil, Natural Gas, Refinery Products, Fertilisers, Steel, Cement, and Electricity—which together account for 40.27% of the weight in the Index of Industrial Production (IIP).
For the first half of the current fiscal year (April to September), the overall growth of core sectors—including coal, crude oil, natural gas, refinery products, fertiliser, steel, cement, and electricity—was 4.2%, down from 8.2% in the same period of the previous year.
Aditi Nayar, chief economist, ICRA stated that the improvement in the core sector's performance to 2.0% growth in September 2024, was aided by the easing of rainfall-related disruptions in sectors such as mining and electricity.
“The disaggregated trends are relatively healthy, with a sequential improvement in the YoY growth of five of the 8 sectors. Notably, the growth in cement production improved to a 6-month high of 7.1% in September 2024 from a contraction of 3.0% in August 2024, aided by a favourable base. In contrast, steel output rose by just 1.5% in the month, the slowest pace in 33 months,” says Nayar.
“ICRA projects the IIP to grow by ~3-5% in September 2024, amid a narrower contraction in electricity and mining output, as well as a favourable base, and a sharp uptick in the growth in GST e-way bills (to 18.5% in Sep 2024 from 12.9% in Aug 2024), supported by pre-festive stocking. With some shifts in the festive calendar, base effects are likely to obfuscate an analysis of how the economic growth momentum is unfolding over the next few months," Nayar adds.
