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The eight core industries’ growth continued to show buoyancy, with the latest August 2023 print at a record 12.1 per cent. This is substantially higher than the 4.2 per cent growth in August last year.
All the eight core industries’ —Coal, Natural Gas, Crude Oil, refinery products, fertilisers, Cement, Steel and Electricity —recorded positive growth in August 2023.
The eight core industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP).
The latest growth print of 12.1 per cent is a 14-month high, which was also higher than the 8.4 per cent growth recorded in July 2023.. In June 2023, the core industries growth had come in at 8.3 per cent.
Meanwhile, the Commerce and Industry Ministry has revised the final growth rate of May 2023 to 5.2 per cent.
For April-August 2023, the core industries output grew 7.7 per cent (provisional) as compared to 10 percent in same period last year.
In fiscal 2022-23, core industries output grew 7.6 per cent, lower than 10.4 per cent growth in the previous fiscal.
CEMENT SECOR SHINES
Cement sector output growth at 18.9 per cent was the best among all the eight industries for the month under review. In August last year, cement output growth stood at 2.1 per cent.
The latest growth print of 18.9 per cent was also higher than the July month output growth of 6.9 per cent.
COAL SECTOR
Coal sector output growth was the second -best among the eight industries at 17.9 per cent, higher than 7.7 per cent in the same month last fiscal year. It was also higher than the 14.9 per cent growth recorded in July 2023.
OTHER INDUSTRIES
For the month under review, Steel output saw robust growth of 10.9 per cent , higher than the 5.8 per cent growth recorded in the same month last year.
While Crude oil output grew 2.1 per cent (-3.3 per cent), natural gas output was up 10 per cent (-0.9 per cent). In July 2023, Refinery products output grew 9.5 per cent (7 per cent). Fertilisers output grew 1.8 per cent (11.9 per cent). Electricity generation grew robust 14.9 per cent (1.4 per cent).
EXPERTs TAKE
Aditi Nayar, Chief Economist, Head - Research & Outreach, ICRA Ltd said
“A truant monsoon helped to push up core sector growth to a robust 12.1% in August 2023, boosted by double-digit expansion in five of the eight components, except fertilisers, crude oil and refinery products, with the latter nonetheless recording a robust 9.5% increase.
Given the uptick in the core sector growth, as well as a healthy performance of high-frequency indicators such as auto output, GST e-way bills, rail freight etc., we forecast the IIP to expand by 9-11% in August 2023.”
Madan Sabnavis, Chief Economist, Bank of Baroda said that high core sector growth was a result of buoyancy in construction sector covering homes and infrastructure projects of government.
High power growth is also indicative of robust commercial demand.”It augurs well for IIP growth which can be 7-8% for the month”, Sabnavis said.
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