India’s core infrastructure sector grew to a three-month high of 1.7 percent in June, up from 1.2 percent in May, as rains played spoilsport, according to data released by the Ministry of Commerce and Industry on July 21.
This marks the third consecutive month that the eight core industries—coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity—have posted growth below 2 percent. These sectors collectively account for 40 percent of the Index of Industrial Production (IIP), making their performance a key indicator of economic momentum.
"Although the year-on-year (YoY) growth in core output improved slightly to 1.7% in June 2025 from 1.2% in May 2025, it remained decidedly tepid, with as many as five of the eight sectors recording a contraction in their output in the month. While an elevated base weighed upon coal output, excess rains in the latter half of June 2025 impacted electricity generation," said Aditi Nayar, chief economist, Icra.
Coal witnessed the sharpest contraction at 6.8 percent, with growth coming in at a five year low. Electricity sector continued to contract for a second consecutive month at 2.8 percent, while contraction in fertilisers narrowed to 1.2 percent from 5.9 percent in the previous month.
On the other hand, government's pick up in capex helped keep the momentum going in steel and cement industries at 9.3 percent and 9.2 percent, respectively.
Growth remained weak on a quarterly basis. Core sector output expanded just 1.3 percent in the April–June quarter of FY26, compared to 6.2 percent during the same period last year.
Steel sector, despite being one of the best performing in the quarter at 7 percent, witnessed slower growth that Q1FY25 (8.3 percent).
"The steel output growth improved to a seven-month high of 9.3 percent yoy in June 2025 from 7.4% yoy in the previous month. The cement output grew at a healthy 9.2 percent yoy plausibly due to steady government capex and a favourable base effect (June 2024: 1.8 percent yoy)," said Paras Jasrai, associate director, India Ratings and Research.
Economists expect this subdued infrastructure performance to weigh on overall GDP growth in the first quarter of FY26.
"The tepid growth in infrastructure sector output is expected to keep the IIP growth around 1.5% yoy in June 2025. The daily power generation was up 2.1% yoy as of 20 July 2025. This along with an unfavourable base effect (July 2024: 6.3% yoy) would keep the core sector output growth around 2% yoy in July 2025, in Ind-Ra’s view," Jasrai noted.
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