Core sector growth rebounds to 2% in Sept after Aug setback – ETCFO

India’s core sector output growth rose 2% in September from a 42-month low of 1.6% the previous month, according to official data released on Wednesday.

If the August reading is excluded, the growth in September was the slowest in around two years.

Output had increased by 9.5% in September 2023.

“Easing of the disruption related to rainfall on sectors like mining and electricity contributed to the turnaround in the core sector’s performance (against the August reading),” said Aditi Nayar, chief economist at ICRA.

The core sector comprises eight industries: coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity. Five of these sectors grew in September.

Performance across these sectors was lower in the first half of the current financial year at 4.2% compared with 8.2% during the same period last year, according to the data from the commerce and industry ministry.

Cement recorded the fastest year-on-year growth at 7.1% in September. Next was refinery products at 5.8%, followed by coal (2.6%), fertilisers (1.9%), and steel (1.5%). On the other hand, crude oil, natural gas and electricity output declined by 3.9%, 1.3% and 0.5%, respectively.

“The growth in cement production improved to a six-month high of 7.1% in September 2024 from a contraction of 3.0% in August 2024, aided by a favourable base. In contrast, steel output rose by just 1.5% in the month, the slowest pace in 33 months,” Nayar noted.

Steel was the top-performing sector in the first half of the current financial year, showing 6.1% growth compared with a year earlier. It was followed by electricity and coal (5.9% each), refinery products (2.3%) and natural gas (2%).

These eight sectors account for 40.27% of the weight in the Index of Industrial Production (IIP).

The IIP had contracted 0.1% in August, for the first time in 22 months, according to the data released earlier this month.

ICRA projects IIP to grow 3.5% in September due to reduced contraction in electricity and mining output, a favourable base effect and a significant increase in GST e-way bills, assisted by pre-festive stocking, said Nayar.