Core industries growth hits six-month high of 8.4 per cent in April

Aided by strong show in coal and electricity output, the eight core industries output grew a robust six-month high of 8.4 per cent in April, much higher than revised 4.9 per cent output growth recorded in March. 

The latest growth print was however lower than 62.6 per cent growth seen in April 2021. 

For the month under review, six of the eight core industries remained in growth territory. Only two sectors — crude oil (-0.9 per cent) and steel (-0.7 per cent) saw contraction. The other six industries that saw positive  growth rate in April are coal (28.8 percent); natural gas (6.4 per cent); refinery products (9.2 per cent); fertilisers (8.7 per cent); cement (8 per cent); and electricity (10.7 per cent).

The eight core industries have weightage of 40.27 per cent in the index of industrial production (IIP).

Meanwhile, the Commerce and Industry Ministry has revised upwards the final growth rate of core industries for January 2022 to 4 per cent from 3.7 per cent. Last month the growth output of core industries for December 2021 was revised upwards to 4.1 per cent from its provisional level of 3.8 per cent.

Commenting on the latest core data numbers, Madan Sabnavis, Chief Economist at Bank of Baroda, told BusinessLine that core sector growth at 8.4 per cent for April is quite impressive as it comes over a high base of 62.6 per cent. 

“IIP growth (for April) too can be expected to be in the higher single digit range of 6-8 per cent based on these growth rates for core sector,” he added.

Some of the numbers are impressive like coal which grew by 28.8 per cent and power by 10.7 per cent, he said. This is difficult to reconcile with the power crisis that was there in April with shortage of coal and power being reported, according to Sabnavis. Evidently, this was not the case, he added. 

Aditi Nayar, Chief Economist, ICRA, said: ”While the core sector growth rose to a 6-month high 8.4 per cent in April from 4.9 per cent in March, benefitting from the constrained base of the second wave of Covid-19 in India, it trailed our forecast of 11-12 per cent by a wide margin, dampened by a contraction in steel and crude oil.”

Sunil Kumar Sinha, Principal Economist, India Ratings and Research, said that though coal and fertilisers recorded impressive annual growth in April, when compared against the pre-Covid level (February 2020), they still have some grounds to cover as they are only 85.4 per cent and 89 per cent of the pre-Covid level, respectively. Production of other core segments are also just crossed the pre-Covid level alluding to the weak recovery across various infrastructure sectors. Ind-Ra expects the IIP growth at around mid single digits in April, he added.