Output growth in India’s eight core sectors hit a four-month high of 7.8% in January, from 7% in December 2022, led by a sharp 18% uptick in fertiliser production and double-digit growth in coal mining and electricity generation.
The overall Index of Core Industries, which constitutes about 40% of the Index of Industrial Production (IIP), was at its highest level in ten months this January, with output rising 2.9% sequentially from December 2022. Core sectors’ output had grown 4% in January 2022.
For the second successive month, all core infrastructure sectors except crude oil, registered growth in output from a year ago. Crude oil production contracted 1.1%, marking the eighth month in a row that output shrank year-on-year. Fertilisers’ output surge was aided by base effects as it had contracted 2% in January 2022.
Steel and cement production grew 6.2% and 4.6%, respectively, in January 2023. However, this marked the slowest growth rate for both sectors in three months. Refinery products and natural gas output recorded growth for the second month in a row, with the uptick accelerating to 5.3% and 4.5%, respectively.
“The 13.4% growth in coal and 12% rise in electricity is indicative of steady industrial activity during the month. Higher power demand is also associated with high growth in the services sector too,” said Madan Sabnavis, chief economist at Bank of Baroda. Mr. Sabnavis expects IIP growth to be between 5% and 6% in January, compared to 4.3% in December.
