Core sectors’ growth falls to 4% in June

New Delhi: The growth in production of eight key infrastructure sectors slowed down to a 20-month low of four per cent in June this year due to a decline in the output of crude oil and refinery products, according to official data released on Wednesday. The core sectors’ production grew by 6.4 per cent in May 2024. The growth of core sectors -- coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity -- was 8.4 per cent in June 2023. The previous low level of growth was recorded in October 2022 at 0.7 per cent.

During April-June this fiscal, the output of core sectors rose by 5.7 per cent against 6 per cent in the same period last fiscal. The eight core sectors contribute 40.27 per cent to the Index of Industrial Production (IIP), which measures overall industrial growth.

Crude oil, and refinery products’ output contracted by (-) 2.6 per cent and (-) 1.5 per cent, respectively, in June. The growth rate in the production of natural gas, fertiliser, steel and cement slowed down to 3.3 per cent, 2.4 per cent, 2.7 per cent and 1.9 per cent, respectively, during the month under review.

However, the production growth of coal and electricity rose by 14.8 per cent and 7.7 per cent, respectively. Commenting on the data, Icra Ltd Chief Economist Aditi Nayar said that the core sector expansion slid to a 20-month low due to a moderation in growth or deepening contraction in five of the eight constituents, barring coal, fertilizers and cement, compared to May 2024. “With the dip in the core sector growth, we expect the IIP (index of industrial production) to post a rise of 3.5-5 per cent in June 2024,” she said.