India's core sector growth recovers to 3.8% in Mar from five-month low of 3.4% in Feb

Core sector growth picks up

India's core sector growth recovered to 3.8 percent in March from a five-month low of 3.4 percent in February, according to provisional data released by the government on Monday.

"The YoY rise in the core sector inched up slightly to 3.8 percent in March 2025, led primarily by the higher growth in electricity generation amid rising temperatures. In disaggregated terms, the sequential trend was quite mixed, with fertilisers, coal, natural gas and refinery products reporting a moderation in their YoY growth in March 2025 relative to the previous month," said Aditi Nayar, chief economist, Icra.

The eight core industries, which largely represent India's infrastructure sector and account for 40 percent weight in the index of industrial production, ended FY25 at a four-year low growth rate of 4.4 percent compared with 7.6 percent in the previous fiscal.

The slow performance of the sector can also be attributed to elections, which disrupted capital spending both by centre and states.

Two of the eight sectors in March continued to exhibit contraction as global fuel prices remained subdued amidst a growing trade war. Crude oil contracted 1.9 percent, whereas contraction of natural gas industries widened to 12.7 percent from 6 percent in the previous month. Growth in refining industries was flat at 0.2 percent.

Of the eight sectors, four grew at a stronger pace than the previous month, led by cement, steel and electricity. Cement continued to exhibit double digit growth at 11.6 percent compared with 10.8 percent in the previous month, while steel grew at 7.1 percent from 6.9 percent in February. Electricity growth picked up to 6.2 percent from 3.6 percent earlier.

"While most of the increase in production can be attributed to higher government spending during the end of the year, the fact that private sector investment announcements increased sharply in Q4 also supports this growth in demand for steel," said Madan Sabnavis, chief economist, Bank of Baroda.

On the other hand, fertiliser growth slowed to 8.8 percent, so did the growth in coal at 1.6 percent.

Economists expect industrial production to stay muted in March. Icra expects growth to settle around 3-3.5 percent, whereas Bank of Baroda is expecting a higher 4-4.5 percent level.

The government has advanced the timeline of release of data for both eight core industries and The eight core industries data will now be released in the third week of every month, followed by IIP by end of the month.

The time lag for data release has been reduced to 45 days from 60 days earlier.