India's eight core infrastructure industries recorded a growth of 1.7% in September 2024, compared to the same month last year, according to official data released on Wednesday. This marks an improvement from the revised 0.7% growth in August 2024. The expansion was primarily driven by increased output in coal and electricity, while crude oil and natural gas production contracted.
Performance of Key Sectors
The index of eight core industries, which includes coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity, showed mixed results. Coal production rose 2.6% year-on-year, and electricity generation increased by 1.8%. However, crude oil output declined by 3.2%, and natural gas production fell by 1.1%. Refinery products grew marginally at 0.5%, while fertilizers saw a 3.4% rise. Steel production increased by 2.7%, but cement output dropped by 0.4%.
Implications for Industrial Output
The core sectors account for about 40% of the index of industrial production (IIP). The sluggish growth in these sectors could weigh on overall industrial output, which has shown signs of moderation in recent months. Economists noted that while the 1.7% growth is a positive sign, it remains below the levels needed to sustain a robust industrial recovery.
In the first half of the fiscal year (April-September 2024), the cumulative growth of core industries stood at 3.5%, compared to 5.2% in the same period last year. This slowdown reflects global headwinds and domestic challenges, including high input costs and uneven demand.
Government and Expert Views
Government officials expressed cautious optimism, stating that infrastructure spending and policy reforms are expected to boost growth in the coming months. However, experts pointed out that the contraction in crude oil and natural gas is a concern, as it may affect energy security and fiscal revenues. They also highlighted the need for sustained investment in renewable energy to reduce dependence on fossil fuels.
The data comes ahead of the Reserve Bank of India's monetary policy meeting, where the central bank is expected to maintain a status quo on interest rates amid inflation concerns. The core sector growth figures will be a key input for policymakers assessing the economic trajectory.
