Aided by a robust performance in Coal, Cement and Steel sectors, the output of the country’s eight core industries hit a five-month high at 8.2 per cent in June 2023.

The latest print was higher than the 5 per cent growth (revised upwards from 4.3 per cent estimated earlier) seen in May 2023, but lower than the 13.1 per cent growth recorded in June last year.

Except for Crude Oil (which contracted marginally at 0.6 per cent), all seven other core industries recorded positive growth in June 2023. The other seven industries are Coal, Natural Gas, refinery products, fertilisers, steel, cement and electricity.

For April-June 2023, core sector growth stood at 5.8 per cent, down from 13.9 per cent in the same period last year. In fiscal 2022-23, the core industries output grew 7.6 per cent, lower than the 10.4 per cent growth in the previous fiscal.

Meanwhile, the Centre has revised upwards the final growth rate of core industries for March 2023 to 4.2 per cent (3.6 per cent).

For the month under review (June 2023), the steel sector recorded an output growth of 21.9 per cent (3.3 per cent). While the coal sector in June 2023 saw an output growth of 9.8 per cent (32.1 per cent),  cement output grew 9.4 per cent (19.7 per cent). Electricity generation grew 3.3 per cent (16.5 per cent) and fertiliser output grew 3.4 per cent (8.2 per cent).

Even on a higher base, both Steel and Cement sectors did well in June 2023, largely due to Government’s focus on infrastructure. Both Steel and Cement saw double-digit growth rates of 12.2 per cent and 15.9 per cent, respectively in April-June 2023.

The eight core industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP). 

EXPERTS’ TAKE 

Madan Sabnavis, Chief Economist, Bank of Baroda, said that the performance of the core sector has been impressive at 8.2 per cent over 13.1 per cent witnessed in 2022. 

“Growth has been broad-based thus reflecting buoyancy in the infrastructure sector this year. Overall growth in IIP could be expected to be in the 5-6% range this month”, Sabnavis added.

Aditi Nayar, Chief Economist, Head - Research & Outreach, ICRA Ltd said that the 5-month high of 8.2 percent in core sector growth was led by six of the eight constituents except cement and fertilisers. The tardy onset of the monsoon contributed to improved performance of electricity, coal etc, she said. 

“With the boost seen in mining and electricity from a dryer-than-normal June, we expect the YoY IIP growth to print at 4-6% in June 2023, in spite of the moderation in the YoY performance of several available high frequency indicators”, Nayar said.

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