Core sector growth. India’s core industries grow at 4-month high of 7.8% in January

Infrastructure output, which comprises eight sectors including coal and electricity accounting for nearly 40 per cent of industrial output, rose 7.9 per cent in the April-January period, the official data showed.

The output of the country’s eight core industries grew to a four month high of 7.8 per cent in January 2023, nearly double the 4 percent growth seen in same month last fiscal.

The latest core sector print is also higher than the revised 7 percent growth recorded in December 2022. 

The eight core industries are coal, fertilisers, steel, cement, electricity, crude oil, natural gas and refinery products. 

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The cumulative growth rate of eight core industries during April-January 2022-23 was 7.9 per cent (provisional) against 11.6 percent in the corresponding period of last year.

Movers and shakers 

For the month under review, seven of the eight core sectors were in positive territory. Only crude oil saw a contraction of 1.1 percent. Output growth recorded by coal stood at 13.4 per cent, fertilizers (17.9 per cent), steel (6.2 per cent), cement (4.6 per cent) and electricity (12 per cent). While natural gas saw an output growth of 5.3 percent, refinery products output grew 4.5 percent.

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

Commenting on the core sector data, Madan Sabnavis, Chief Economist, Bank of Baroda, said that steel and cement grew 6.2 per cent and 4.2 per cent, respectively with infra activity taking off largely due to the centre. “With roads, railways and metals segment witnessing traction this is a good sign for the economy on the investment front.

Growth of 13.4 per cent in coal and 12 per cent in electricity is indicative of steady industrial activity during the month. Higher power demand is also associated with high growth in the services sector too”, he said.

He said that growth in natural gas was lower more due to the high base effect as fertilizer production was up (it is a  major consumer  of gas).

Sabnavis said that industrial growth for January 2023 can be expected at around 5-6 percent.

Nilanjan Banik, Economist at Mahindra University, said the latest core sector performance is not surprising and is a reflection of the huge capital expenditure that the government has initiated towards building roads, ports, airport terminals and warehouses.

“The multiplier effect of capital expenditure is kicking in. The Indian economy is performing strong and the momentum is going to continue,” Banik told businessline.

Aditi Nayar, Chief Economist, ICRA, said “Core sector growth strengthened to a four month high of 7.8 per cent in Jan 2023, with a fairly broad-based upmove aside from the sharp slide in growth of cement output.”

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