The output growth of the country’s eight core industries hit a five month low of 3.6 per cent in March 2023, lower than 4.8 per cent achieved in the same month last year.

The latest core industries growth print was half the 7.2 per cent growth seen in February 2023, official data released on Friday showed.

In fiscal 2022-23, core industries output grew 7.6 per cent, lower than 10.4 per cent growth in the previous fiscal.

For the month under review, five of the eight sectors remained in positive growth territory. These five sectors are coal, refinery products, natural gas, fertilisers and steel. The three sectors that saw contraction are crude oil, cement and electricity.

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

December 2022 growth rate revised

Meanwhile, the Commerce and Industry Ministry has revised upwards the December 2022 growth rate to 8.3 per cent from an earlier provisional level of 7.4 per cent. It maybe recalled that the January 2023 output growth was revised upwards to 8.9 per cent from 7.8 per cent projected earlier.

Commenting on the latest core sector performance, Aditi Nayar, Chief Economist, Head-Research & Outreach, ICRA Ltd, said that the halving in the YoY core sector growth to a five month low of 3.6 per cent in March 2023 from 7.2 per cent in February 2023, was fairly broad-based, with only coal and crude oil displaying a sequential improvement. 

“Output of some of the sectors is likely to have been dampened by the unseasonal rainfall, such as electricity and cement, which displayed a YoY contraction in March 2023 along with crude oil. At the same time, coal, fertilisers and steel displayed a healthy expansion in excess of 8 per cent in March 2023, which is encouraging”, she said.

Dampened by a high base and heavy rainfall, the YoY performance of most of the available high frequency indicators weakened in March 2023, relative to February 2023, similar to the trend in the core sector. Accordingly, ICRA expects the YoY growth in the IIP to dip to ~3-4 per cent in March 2023, Nayar added.

Madan Sabnavis, Chief Economist, Bank of Baroda noted that subdued activity was seen in the infrastructure sector in March 2023. The steel demand was due to the auto industry rather than infrastructure spending, he said. Also fertiliser production was up preparing for Kharif sowing, he added.