India’s core sector growth eases to 2 percent in July weighed down by energy sector

Core sector growth in July

India’s core sector growth eased to 2 percent in July compared to 2.2 percent a month ago, as per official data released on August 20, with energy sector output contracting due to monsoon activity.

The performance of the eight core industries - which carry a 40 percent weight in the Index of Industrial Production (IIP) - remained muted, with half of them contracting during July.

Coal output contracted sharply by 12.3 percent, marking its steepest fall in five years, while crude oil production fell for a seventh consecutive month, down 1.4 percent. Natural gas output declined by 3.2 percent while petroleum refining contracted after a two-month expansion.

On the brighter side, infrastructure-linked sectors provided some support, as steel posted its fastest growth in 21 months, rising by 12.8 percent, while cement output expanded 11.7 percent to its highest in four months. Electricity generation inched up 0.5 percent, a three-month high that brought the sector back into the positive territory.

The data underline the divergence within India’s industrial landscape, with strong growth in construction-related sectors offset by weakness in energy production.