India's core sector growth falls to six-month low of 7.8% in November

In November 2022, India’s eight core sectors – which include coal, crude oil, natural gas, refinery products, fertiliser, cement, electricity, and steel – had grown by 5.7 percent.

India's eight core sectors posted a growth of 7.8 percent in November, according to data released by the Ministry of Commerce and Industry on December 29.

At 7.8 percent, the growth in India's eight key infrastructure industries - coal, crude oil, steel, cement, electricity, fertilisers, refinery products, and natural gas - last month is the lowest in six months and sharply down from the 12.1 percent recorded in October. The commerce ministry, on December 29, revised this figure to 12.0 percent.

Output of the eight core sectors had grown by 5.7 percent in November 2022.

For April-November, the core industries' production was 8.6 percent higher year-on-year as against a growth of 8.1 percent in the first eight months of 2022-23.

The fall in core sector growth in November was largely due to the cement sector, whose output contracted by 3.6 percent year-on-year after it had jumped by a huge 17.4 percent in October.

The performance of the other sectors in November is as follows:

>> coal output up 10.9 percent as against 18.4 percent in October

>> crude oil output down 0.4 percent as against a growth of 1.3 percent in October

>> natural gas output up 7.6 percent as against 9.9 percent in October

>> refinery products output up 12.4 percent as against 4.2 percent in October

>> fertiliser output up 3.4 percent as against 5.3 percent in October

>> steel output up 9.1 percent as against 10.7 percent in October

>> electricity output up 5.6 percent as against 20.3 percent in October

While overall core sector output was up 7.8 percent on a year-on-year basis in November, it was down 3.4 percent from October. In fact, within the sectors, only production of coal and refinery products was higher in November on a sequential basis, with cement and electricity production down 13-14 percent month-on-month.

The sequential fall in output can be explained by the fact that November had fewer working days compared to October on account of the festival season.

A fall in core sector growth in November likely means industrial growth, as per the Index of Industrial Production (IIP), will also decrease once data for last month is released on January 12.

"Given the larger number of factory holidays, we anticipate a modest 2-4 percent rise in the IIP in November," Aditi Nayar, chief economist at ICRA, said.

In October, India's IIP growth surged to a 16-month high of 11.7 percent, higher than expectations and nearly double the September print of 6.2 percent, helped by a favourable base. With the eight core industries making up more than 40 percent of the weight of the IIP, the former is seen as a lead indicator of industrial growth.