Core sector output growth dips to a 5-month low of 3.6% in March

The output of crude oil declined by 2.8 per cent, power by 1.8 per cent and cement by 0.8 per cent in March this year

Growth in the output of eight core sectors slumped to five-month low of 3.6 per cent in March from 7.2 per cent in the previous month, dragged by fall in production of electricity, cement and crude oil, the government data showed.

The sharpest decline was recorded in the production of crude oil, which was down by 2.8 per cent when compared with the same month last year.

Electricity generation declined by 1.8 per cent in March on a year-on-year basis while cement production was down by 0.8 per cent, as per data released by the Ministry of Commerce and Industry.

Eight core industries, which include coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity, comprise 40.27 per cent weight in the Index of Industrial Production (IIP).

The weak core sector data is likely to dampen the overall industrial production growth in the country.

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Aditi Nayar, chief economist at ICRA, said the output of the sectors like electricity and cement was dampened by unseasonal rainfall.

“The year-on-year performance of most of the available high frequency indicators weakened in March 2023, relative to February 2023, similar to the trend in the core sector. Accordingly, ICRA expects the YoY growth in the IIP to dip to 3-4 per cent in March 2023,” Nayar said.

Core sector output growth stood at 4.8 per cent in March 2022. The growth in March 2023 was the lowest since October 2022 when it recorded a sluggish expansion of 0.7 per cent.

The production of coal jumped by 12.2 per cent year-on-year in March. Fertilisers output increased by 9.7 per cent, steel by 8.8 per cent, and refinery products by 1.5 per cent during the month under review on a year-on-year basis.

However, only coal and crude oil displayed a sequential improvement in March.

For the whole fiscal 2022-23, the cumulative growth in the output of the eight core sectors stood at 7.6 per cent, which is sharply down from 10.4 per cent recorded in 2021-22.

Coal production jumped by 14.8 per cent in 2022-23 when compared with the previous year. The annual growth in electricity output stood at 8.9 per cent, cement 8.6 per cent, steel 8.6 per cent, fertilisers 11.3 per cent, petroleum refinery products 4.8 per cent, and natural gas 1.6 per cent.

Crude oil, which has 8.98 per cent weight in the Index of Eight Core Industries, posted a contraction of 1.7 per cent in output during the year ended March 2023 when compared with the previous year.