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The eight core industries’ growth picked up sequentially to hit a two-month high of 6.1 per cent in July, higher than the upward revised growth of 5.1 per cent in June 2024. However, the latest print was lower than the July 2023 reading of 8.5 per cent.
For the April-July 2024 period, the core industries’ growth stood at 6.1 per cent, lower than 6.6 per cent growth in same period last year, data released by Commerce and Industry Ministry on Friday showed.
Positive sectors
For the month under review, six of the eight sectors recorded positive growth. The sectors that showed positive growth are steel, electricity, coal, refinery products, cement and fertilizers.
The eight core industries — coal, natural gas, crude oil, refinery products, fertilizers, cement, steel and electricity — comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP).
Meanwhile, the government has revised growth rate for April 2024 to 6.9 per cent.
Madan Sabnavis, Chief Economist, Bank of Baroda, said that core sector growth was impressive for July at 6.1 per cent as it comes over high growth of 8.5 per cent in same month last year.
He said that industrial production may be expected to grow at a steady rate in July and would be around 6 per cent.
Aditi Nayar, Chief Economist, Head-Research and Outreach, ICRA Ltd, said “the sequential pickup in the core sector growth to 6.1 per cent in July while encouraging, was not broad based, with half of the eight constituents reporting a weaker print.”
Paras Jasrai, Senior Economic Analyst, Ind-Ra, said that despite an unfavourable base effect, the core sector output grew 6.1 per cent y-o-y in July better than the previous month (5.1 per cent y-o-y). This was higher than India Ratings & Research’s (Ind-Ra) expectations (5 per cent y-o-y), he said.
He highlighted that the sub-sectoral data indicate that the upturn in y-o-y growth was not uniform/broad-based. The significant pickup in the y-o-y growth of only four sectors namely refinery products, fertilizers, steel and cement representing 54 percent of the eight-sector infrastructure index helped in lifting up the growth of the segment.
The y-o-y growth of refinery products and fertilizers stood at 6.6 per cent and 5.3 per cent which was at an eight- and seven-month high respectively in July, he said.
The y-o-y growth of steel and cement sectors was at a three-month high of 7.2 per cent and at a four-month high of 5.5 per cent in the same period, respectively.
Rise in capex
An increase in government capex provided succor to these sectors. The capex of the Central and 19 State governments was up 53.8 per cent y-o-y to ₹1.01 lakh crore in July, picking up after a lull in the previous three months, Jasrai added.
Sabnavis said that electricity continued to do well at 7 per cent which had backward link to coal which grew by 6.8 per cent. This is an indication of heightened business activity as July was a month that had good rains and the ‘heatwave’ effect was minimal, he said.
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