Core sectors’ output grew at four-month high pace of 4.3% in November

Photo used for representation purpose only.
| Photo Credit: The Hindu

Output in India’s eight core infrastructure sectors that constitute about 40% of overall industrial production, grew at a four-month high pace of 4.3% in November, led by a 13% surge in cement, marking the sharpest rise in the key construction input’s production in well over a year.

On a sequential basis, however, the Index of Core Industries (ICI) was down 3.3% from October levels to 156.8, with six of eight sectors recording a decline in production. Refinery products and coal were the only segments to see a rise in absolute output levels, hitting a four-month and eight-month high, respectively. 

The Commerce and Industry Ministry also revised upwards October’s growth number for core sectors from 3.1% estimated earlier, to 3.7%. On a year-on-year basis, crude oil (-2.1%) and natural gas (-1.9%) output remained in contractionary territory for the seventh and fifth month, respectively. However, the extent of contraction was at a six-month low for crude oil, and a three-month high for natural gas.

Electricity generation rose 3.8% from last November levels, but was a sharp 12.9% below October’s levels and in fact, was the weakest output recorded since December 2023. Steel output was up 4.8% from a year ago, but was 4.7% under October’s levels. Fertilisers’ output expanded 2% year-on-year, while refinery products were up 2.9% and coal production rose 7.5%.

Despite the double-digit growth in November, cement output was actually 5.5% lower than October and stood at a four-month low. “The cumulative growth rate of ICI during April to November, 2024-25 is 4.2% as compared to the corresponding period of last year,” the ministry said. Over the same period in 2023-24, the ICI has grown 8.7%.

The ministry also revised the Index of Eight Core Industries for August with updated data that shows it had declined by 1.5% as opposed to the 1.6% dip estimated as of last month and the 1.8% decline originally estimated. August had marked the first contraction in core sectors’ output in three and a half years.

“There has been a pick-up in infra activity as seen also in government spending more on capex in November. Construction of homes also showed momentum and was reflected in steady growth in steel and cement. We may expect the Index of Industrial Production (IIP) to grow around 4.5%-5% in November, given the festival demand,” said Bank of Baroda chief economist Madan Sabnavis.

Aditi Nayar, ICRA chief economist, said half of the core sectors saw an improvement in November, reflecting to some extent the fading impact of heavy rainfall in the earlier months. “The sequential uptick in the core sector’s performance was especially driven by a sharp increase in the growth of cement output, on the back of a low base. Looking ahead, we expect the IIP to grow by 5%-7% in November,” she reckoned.