The output of the country’s eight core industries hit a six-month low of 3.5 per cent in April 2023, lower than the 9.5 per cent growth recorded in the same month last year.

The latest core industries growth print was also lower than the 3.6 per cent growth seen in March 2023, official data released on Wednesday showed.

Meanwhile, the core industries output for 2022-23 has now  been revised upward to 7.7 per cent, from 7.6 per cent estimated earlier. This was largely due to upward revision in January 2023 output growth to 9.7 per cent from 8.9 per cent earlier. In the previous fiscal, the core industries growth was 10.4 per cent.

For the month under review, four of the eight sectors remained in positive growth territory. These four sectors are coal (9 per cent), fertilisers (23.5 per cent), cement (11.6 per cent) and steel (12.1 per cent). The three sectors that saw contraction are crude oil (-3.5 per cent), refinery products (-1.5 per cent), natural gas (-2.8 per cent) and electricity (-1.4 per cent).

The eight core industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP). Commerce and Industry Ministry has now pegged the January 2023 growth rate at 9.7 per cent as against 8.9 per cent earlier. Last month, the December 2022 growth rate was revised upwards to 8.3 per cent from an earlier provisional level of 7.4 per cent.

Experts view

Commenting on the latest core sector performance, Nilanjan Banik, Economist from Mahindra University noted that Core sector output growth was tad lower in April 2023 at 3.5 per cent as against previous month level of 3.6 percent, but pointed out that the good news is that the economy continues to grow. 

Madan Sabnavis, Chief Economist, Bank of Baroda said that he expects the IIP growth for April 2023 to come in the range of 2-3 per cent.

He highlighted that electricity again clocked a negative growth of -1.4%. 

“This is on a higher base of 11.8%. But this is also reflective of lower level of industrial activity which has brought down demand. Domestic demand would have varied due to extreme conditions witnessed in different parts of the country. Unseasonal rains did lower the need for cooling while extreme heat did cause an uptick in demand”, Sabnavis said.

He noted that the coal production was high at 9 per cent which came on top of 30 per cent growth last year.

The oil basket: crude, natural gas and refined products witnessed negative growth reflecting lower demand. “Benign global crude prices has a tendency to lower production of domestic crude oil as imports are preferred”, he said.

Cement grew by 11.6 per cent in preparation of future demand as there is a lull once the monsoon starts.

Fertilizers production, as expected grew by 23.5% in preparation for the kharif sowing season, he said.