India’s core sector growth slows to 8-month low of 0.5% in April

Core sector growth for April

Uncertainty fuelled by tariff tantrums and a high base slowed India's core sector growth to an eight month low of 0.5 percent in April from 4.6 percent in the previous month, according to provisional numbers released by the government on May 20.

“The impact of Tariff Tantrums led unprecedented economic uncertainty along with a high base effect (April 2024: 6.9% yoy) pulled the infrastructure output growth down to be the lowest since August 2024. Majority of the sub-sectors (six) witnessed a moderation in growth in April 2025 compared to the previous month’s four,” said Paras Jasrai, Associate Director, India Ratings and Research.

Uncertainty fuelled by tariff tantrums and a high base slowed India's core sector growth to an eight month low of 0.5 percent in April from 4.6 percent in the previous, according to provisional numbers released by the government on May 20.

“The impact of Tariff Tantrums led unprecedented economic uncertainty along with a high base effect (April 2024: 6.9% yoy) pulled the infrastructure output growth down to be the lowest since August 2024. Majority of the sub-sectors (six) witnessed a moderation in growth in April 2025 compared to the previous month’s four,” said Paras Jasrai, Associate Director, India Ratings and Research.

The eight core industries, which largely represent India's infrastructure sector and account for 40 percent weight in the index of industrial production, started the year with a subdued performance, experiencing the largest sequential contraction at 11.4 percent since April 2021.

Three of the eight sectors recorded a contraction, with only two growing faster than the previous month.

“The deceleration was broad-based, led by six of the eight sectors barring coal and natural gas,” said Aditi Nayar, chief economist, Icra.

Among the infrastructure industries, cement was the fastest growing at 6.7 percent, but growth slowed from 12.2 percent in March. Electricity growth was also slower at 1 percent compared with 7.5 percent in the previous month, even as coal grew faster at 3.5 percent from 1.6 percent previously.

Economists expect IIP to also trudge lower for the month, recording just 1 percent growth compared with 3 percent in the previous month.

“Based on the tepid rise in the core sector and the performance of the other available high frequency indicators, ICRA expects the IIP growth to moderate sharply to ~1.0% in April 2025. The healthy growth in non-oil exports may provide an upside, unless the same represents round-tripping of some imports," Nayar said.

The government will release IIP numbers on May 28. It has recently reduced the timeline of release bringing it down to 30 days instead of earlier 45 days.

Indian economy is likely to grow slightly slower than earlier expected with geopolitical tensions weighing heavy.

Last month, international agencies, including the International Monetary Fund, pared down India’s growth to 6.2 percent from 6.5 percent estimated earlier.

World Bank now projects the economy to grow 6.3 percent.

The government will release data for Q4FY25 (January-March 2025) on May 30.

The eight core industries, which largely represent India's infrastructure sector and account for 40 percent weight in the index of industrial production, started the year with a subdued performance, experiencing the largest sequential contraction at 11.4 percent since April 2021.

Three of the eight sectors recorded a contraction, with only two growing faster than the previous month.

“The deceleration was broad-based, led by six of the eight sectors barring coal and natural gas,” said Aditi Nayar, chief economist, Icra.

Among the infrastructure industries, cement was the fastest growing at 6.7 percent, but growth slowed from 12.2 percent in March. Electricity growth was also slower at 1 percent compared with 7.5 percent in the previous month, even as coal grew faster at 3.5 percent from 1.6 percent previously.

Economists expect IIP to also trudge lower for the month, recording just 1 percent growth compared with 3 percent in the previous month.

“Based on the tepid rise in the core sector and the performance of the other available high frequency indicators, ICRA expects the IIP growth to moderate sharply to ~1.0% in April 2025. The healthy growth in non-oil exports may provide an upside, unless the same represents round-tripping of some imports," Nayar said.

The government will release IIP numbers on May 28. It has recently reduced the timeline of release bringing it down to 30 days instead of earlier 45 days.

Indian economy is likely to grow slightly slower than earlier expected with geopolitical tensions weighing heavy.

Last month, international agencies, including the International Monetary Fund, pared down India’s growth to 6.2 percent from 6.5 percent estimated earlier.

World Bank now projects the economy to grow 6.3 percent.

The government will release data for Q4FY25 (January-March 2025) on May 30.