Core sector output growth falls to five-month low of 3.6% in March

The core sector growth was above 7 percent since December last year

The output of India's eight core sectors grew by 3.6 percent in March 2023, the slowest in the last five months, as per the official data released on April 28. In the year-ago period, the core sectors had grown by 4.3 percent.

The growth rate in March has halved as compared to the preceding month of February 2023, when it stood at 7.2 percent.

The plunge in March was driven by a decline in the output of three key sectors - cement, electricity and crude oil.

The sharpest dip was recorded in crude oil production, which slumped by 2.8 percent, followed by electricity generation that went down by 1.8 percent, and cement production declined by 0.8 percent.

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Two other key sectors, natural gas and petroleum refinery products, registered a growth of 2.8 percent and 1.5 percent, respectively.

The remaining three core sectors - coal, fertilizers and steel - recorded a strong growth during the month. The total coal production increased by 12.2 percent, fertilizers production jumped by 9.7 percent and steel production was up by 8.8 percent.

The core sectors' output has a bearing on the overall Index of Industrial Production (IIP), as they form around 40 percent of the total items weighed under the IIP basket.

Aditi Nayar, chief economist and head (research & outreach) at ICRA, pointed out that the halving of the core sector output growth in March, as compared to February, was "fairly broad-based, with only coal and crude oil displaying a sequential improvement".

“Dampened by a high base and heavy rainfall, the YoY performance of most of the available high-frequency indicators weakened in March 2023, relative to February 2023, similar to the trend in the core sector. Accordingly, ICRA expects the YoY growth in the IIP to dip to 3-4 per cent in March 2023," she said.