Strong show. Core sector output grew 6 per cent in February

The output of the country’s eight core industries grew 6 per cent in February 2023, marginally higher than the 5.9 per cent growth recorded in the same month last year. 

Interestingly, the Commerce and Industry Ministry has revised upwards core sector growth for January 2023 to 8.9 per cent from 7.8 per cent earlier. The latest core sector output for February 2023 is lower than the revised 8.9 per cent for January 2023.

The cumulative growth rate of eight core industries during April-February 2022-23 was 7.8 per cent (provisional), against 11.1 per cent in the corresponding period of last year, an official release showed.

The eight core industries are coal, fertilisers, steel, cement, electricity, crude oil, natural gas and refinery products. Except for crude oil, which saw a contraction in output of 4.9 per cent, the remaining seven sectors were in positive territory. 

Output growth in coal stood at 8.5 per cent, fertilisers (3.3 per cent), steel (6.9per cent), cement (7.3 per cent) and electricity (7.6 per cent). While natural gas saw an output growth of 3.2 per cent, refinery products output grew 3.3 per cent.

The eight core industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP). 

Madan Sabnavis, Chief Economist, Bank of Baroda, said core sector industries performed quite creditably, recording 6 per cent growth in February, compared with 5.9 per cent last year.

Sabnavis said the performance has been driven by the steel and cement sectors, which have done well at 6.9 per cent and 7.3 per cent, respectively, due largely to a pick-up in infrastructure activity in both the government and private sector. The latter has become active towards the end of the year in completing projects, he added.

Fertilisers continue to witness high growth as companies stock up for the depletion in inventories. The negative growth last year added to buoyancy this year, he said. 

“Coal growth continues to be in alignment with growth in the manufacturing sector that necessitates more power consumption. Electricity generation grew by 7.6 pr cent as demand remained buoyant,” he said.

Crude oil production was the only negative element, which can be explained by the low international prices, which made it more economical to import oil from overseas markets.

Refinery products growth was lower at 3.3 per cent on a high base of 8.8 per cent. “IIP growth may be expected to be in the region of 4.5 per cent, based on core sector growth this month,” Sabnavis added.

Aditi Nayar, Chief Economist, ICRA said “With unseasonal rainfall in March 2023 expected to dampen output of coal and electricity, core sector growth may moderate further despite a modestly favourable base effect”.

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