Output growth at India’s eight core sectors eased to 3.5% in April, from 3.6% in March, marking the slowest pace in six months with half of the sectors, including electricity and natural gas, reporting contractions.
Crude oil production shrank 3.5% in April, the 11th straight month of contraction. Natural gas output dropped 2.8% and refinery products plummeted 1.5%, the first such decline since November 2022 for both these sectors.
Cement, steel and fertilisers recorded a strong uptick to offset the declines in half of the sectors covered by the Index of Core Industries. Cement production rebounded from a 0.6% contraction in March to surge 11.6%, the fastest growth in five months.
Steel production grew 12.1% in April, the swiftest pace in three months, while fertiliser production accelerated 23.5%, marking the highest growth in more than a year. Coal output rose 9%, slowing from March’s 12.2% pace.
Bank of Baroda chief economist Madan Sabnavis linked the decline in the oil products basket to lower demand, in addition to a tendency to prefer imports and curtail domestic crude oil production when global crude prices are benign. The 23.5% surge in fertilizer production was as expected in preparation for the kharif sowing season, he noted. Mr. Sabnavis said he expected the Index of Industrial Production (IIP) to have grown between 2% and 3% in April. The core sectors constitute a little over 40% of the IIP.
The Commerce and Industry Ministry, which released the data on Wednesday, further revised upwards January’s core sector growth rate to 9.7%, from its previous estimate of 8.9%. January’s seven-month high growth lifted the overall growth in the core sector through 2022-23 to 7.7%, from 7.6% estimated earlier.
In April 2022, the core sector had reported a 9.5% rise in production levels, with all sectors except crude oil, clocking higher volumes. However, base effects alone did not appear to be responsible for the moderation in growth this April, with output levels shrinking 8.55% from March 2023.
On a sequential basis, the only two sectors to report an uptick were electricity (up 2% from March), and fertilisers (0.5% higher than March). On the other hand, output of coal and steel fell the most from March levels, dropping 31.9% and 7.3%, respectively.
