Core Sector Growth Hits 20-Month Low in June

The production growth of eight key infrastructure sectors in June dropped to a 20-month low of 4%, primarily due to a decline in crude oil and refinery products output. The core sectors had previously grown by 6.4% in May. The sectors affected include coal, crude oil, natural gas, refinery products, fertiliser, steel, cement, and electricity.

The growth in production of eight key infrastructure sectors slowed down to a 20-month low of 4 per cent in June this year due to a decline in the output of crude oil and refinery products, according to official data released on Wednesday.

In May 2024, the core sectors' production had grown by 6.4 per cent. However, in June 2023, it was at 8.4 per cent. The previous low of 0.7 per cent growth was recorded in October 2022.

During April to June this fiscal year, output for these sectors increased by 5.7 per cent, compared to 6 per cent in the same period last fiscal. The eight core sectors contribute 40.27 per cent to the Index of Industrial Production (IIP), which gauges overall industrial growth.

In June, production of crude oil and refinery products contracted by 2.6 per cent and 1.5 per cent, respectively. The output growth of natural gas, fertiliser, steel, and cement also decelerated to 3.3 per cent, 2.4 per cent, 2.7 per cent, and 1.9 per cent, respectively. However, coal and electricity production rose by 14.8 per cent and 7.7 per cent, respectively.

Icra Ltd Chief Economist Aditi Nayar commented that the core sector expansion slid to a 20-month low due to slowed growth or deeper contractions in five of the eight sectors, excluding coal, fertilizers, and cement, when compared to May 2024. She projected that the IIP would rise by 3.5-5 per cent in June 2024.