Core Sector Growth Slows to 6.1% in July Due to Crude and NatGas Decline

India's core sector, which includes eight major industries, registered a growth of 6.1% in July, up from 5.2% in June, according to official data released on Friday. This marks a slowdown from the 8.5% growth observed in July 2023.

The core sector comprises coal, crude oil, steel, cement, electricity, fertilizers, refinery products, and natural gas. The data revealed that, excluding crude oil and natural gas, all other sectors showed an increase in output for July.

Sector Performance

• Crude Oil: Production contracted by 2.9% in July.
• Natural Gas: Output decreased by 1.3%.
• Refinery Products: Saw an increase of 6.6%.
• Coal: Grew by 6.8%.
• Fertilizers: Rose by 5.3%, indicating that companies are building stockpiles for both kharif and rabi crops.
• Steel: Increased by 7.2%, benefiting from heightened infrastructure activity post-elections.
• Cement: Expanded by 5.5%, driven by improved infrastructure and construction activity.

Electricity and Infrastructure

Electricity generation grew by 7% in July, reflecting increased demand linked to a 6.8% rise in coal production. This growth was supported by favourable weather conditions and reduced heatwave effects. Madan Sabnavis, Chief Economist at Bank of Baroda, noted, “Post-elections, there has been a pick-up in road construction, and the strong performance in housing and auto sectors has boosted steel demand.”

Overall Trends

Cumulatively, the growth rate for the core sector's output in the first four months of FY25 decelerated to 6.1%, down from 6.6% in the previous fiscal year. These sectors contribute 40.27% to the Index of Industrial Production (IIP).

Industrial production is anticipated to maintain a steady growth rate of around 6% for July, following a 4.2% increase in June.

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[Disclaimer: The growth rates and trends are based on the latest official data and may be subject to revisions.]