Growth in India’s eight core sectors’ output fell to a five-month low of 3.6% in March, from 7.2% in February, with electricity and cement production slipping from a year ago, and crude oil output falling for the tenth successive month.
Coal production jumped 12.2% in March, while fertilizers and steel output grew 9.7% and 8.8% respectively — relatively slower than recent months — as per data released by the Commerce and Industry Ministry on Friday.
For the full financial year 2022-23, core sectors recorded a 7.6% growth compared to 10.4% in 2021-22, with all sectors reporting higher production except crude oil, which shrank 1.7% during the year.
In March, growth in natural gas production was down to 2.8%, the lowest in three months, while refinery products grew at a four-month low pace of 1.5%.
Cement output drops
Cement output contracted 0.8% in March, breaking a persistent growth streak in the previous four months. Electricity generation dropped for the first time in at least a year, shrinking 1.8% in March.
However, absolute output levels in both these sectors were significantly higher than February — with the cement production index at its highest point since April 2022 and electricity output at its highest since September 2022.
“Output of some of the sectors like electricity and cement is likely to have been dampened by the unseasonal rainfall in March,” reckoned Aditi Nayar, chief economist at rating firm ICRA.
With most available high frequency indicators weakening in March 2023 on a year-on-year basis, relative to February 2023, Ms. Nayar expects growth in the Index of Industrial Production (IIP) to slow to around 3% to 4% in the month from 5.6% in February. The eight core sectors constitute a little over 40% of the IIP.
“The final growth rate of the index of eight core industries for December 2022 is revised to 8.3% from its provisional level of 7.4%,” the Ministry said. It also revised February’s growth rate to 7.2% from 6% estimated earlier.