Synopsis
In December, India's core sector industries experienced a 4 percent annual increase, spurred by higher production in coal, steel, and electricity. This growth serves as a significant indicator of industrial performance.Key Takeaways
- Core sector industries grew by 4 percent year-on-year.
- Coal, steel, and electricity drove the growth.
- Natural gas was the only sector not showing positive growth.
- April-December 2024 growth rate was 4.2 percent.
- Experts noted a decline due to high base effects.
New Delhi, Jan 31 (NationPress) The output of India’s eight core sector industries increased by 4 percent year-on-year in December, primarily fueled by a surge in the production of coal, steel, and electricity during this period, as per the government data released on Friday.
The eight core sectors encompass coal, natural gas, crude oil, refinery products, fertilizers, cement, steel, and electricity, which collectively account for 40.27 percent of the weight of items in the Index of Industrial Production (IIP). Thus, the growth rate of these core sectors serves as a barometer for the overall industrial growth rate.
Except for natural gas, all other sectors demonstrated positive growth in December 2024.
The sectors that exhibited positive growth in December 2024 include coal (5.3 percent), refinery products (2.8 percent), crude oil (0.6 percent), fertilizers (1.7 percent), cement (4 percent), steel (5.1 percent), and electricity (5.1 percent).
For the period from April to December 2024, the growth rate of the core industries stands at 4.2 percent, in contrast to 8.3 percent during the same period in 2023.
Experts point to a high base effect and subpar performance in several sectors as reasons for the decline.
ICRA Chief Economist Aditi Nayar stated that core sector growth cooled slightly to 4.0 percent in December 2024 from a revised 4.4 percent in November 2024, with four out of the eight sectors showing a drop in performance between these two months. However, this aligns with the average growth of 4.0 percent recorded during October-November 2024.
ICRA anticipates that IIP growth may slow to approximately 3-5 percent in December 2024 (4.4 percent in December 2023), down from 5.2 percent in November 2024 (2.5 percent in November 2023), partly due to an unfavorable comparison base,” Nayar added.
Bank of Baroda’s Chief Economist Madan Sabnavis indicated that the moderation in core sector growth in December 2024 results from diminished growth in five of the eight sectors. The exceptions included power which performed better at 5.1 percent, cement at 4 percent, and crude which shifted from negative growth last year, he noted.
IIP growth for December is expected to be around 4 to 4.5 percent, boosted by the consumer goods segment,” Sabnavis concluded.
