The eight core industries’ output growth slid to a 15-month low of 3.6 per cent in January 2024, which is also the lowest monthly print so far this fiscal. 

The latest reading was lower than the revised 4.9 per cent growth recorded in December 2023 and 9.7 per cent recorded in January 2023, official data released on Thursday showed. Six of the eight core industries recorded positive growth for the month under review. Only refinery products output and fertilisers saw a contraction. 

For April-January 2024, core sector growth came in at 7.7 percent, lower than 8.3 percent recorded in same period last fiscal.

The eight core industries — coal, natural gas, crude oil, refinery products, fertilisers, cement, steel and electricity — comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP).

The government has also revised the output growth the eight core sectors for October to 12.7 per cent. Last month, the government had revised upwards the core industries print for September  2023.

Coal output continued to sizzle with a growth of 10.2 per cent in January 2024, albeit lower than the 10.7 per cent growth in December last  year.

For the month under review, natural gas output grew robust 5.5 per cent (6.6 per cent in December ) and steel output was at 7 per cent (7.6 per cent in December).

Cement sector grew 5.6 per cent and electricity generation was up 5.2 per cent in January 2024.

In January 2024, refinery products’ output contracted 4.3 per cent (growth of 4 per cent); fertilizers contracted at 0.6 per cent (5.8 per cent).

Experts’ take 

Aditi Nayar, Chief Economist, Head Research and Outreach, ICRA Ltd, said “Core sector growth slid to a 15-month low of 3.6 per cent in January 2024, with contractions emerging in refinery products and fertilizers and a sub-1 per cent rise in natural gas. Encouragingly, the other five components displayed a moderate-to-healthy expansion ranging from 5.2 percent to 10.2 percent in January 2024”.

Sequential trends were mixed as well, with only three indicators recording an improved year-on-year performance in January 2024 relative to December 2023, namely, crude oil, cement and electricity. 

“With a relatively healthier trend displayed by various other high frequency indicators, we project the IIP to report a growth of 2-4 per cent in January 2024”, Nayar said.

Madan Sabnavis, Chief Economist, Bank of Baroda, said, “Core sector growth in January was a mixed bag. The good part is that cement and steel, which are reflective of capex of government witnessed fairly good growth of 7 per cent and 5.6 per cent notwithstanding the high base effect.“

“We could expect IIP growth to be between 2-3 per cent this month. We do not expect any resurgence in consumer goods production this month and hence will be muted,” he added.

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