August core sector growth hits 3-month low as energy sectors lose steam

New Delhi: India’s core sector output growth eased to a three-month low of 4.8% year-on-year in August due to contraction in energy-related sectors and an unfavourable base, official data released on Monday showed. The growth stood at 5% in July and 6.2% in August 2025.

August data is the third release under the revised index with 2022-23 as the new base year, replacing 2011-12. The updated series also includes iron ore, bringing the number of core industries to nine.

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“Growth in core output eased marginally in August partly on account of an unfavourable base,” said Rahul Agrawal, principal economist at ICRA.

Madan Sabnavis, chief economist at Bank of Baroda, said the moderation was mainly due to weakness in coal, crude oil, and natural gas while the growth was “driven mainly by electricity and cement, reflecting infrastructure and construction activity.”

Fertilisers production contracted for the sixth consecutive month, declining 12.4% year-on-year in August compared with an 8% contraction in July.

Also Read: West Asia crisis: National Highways Builders Federation seeks 3-month extension of road relief measuresSabnavis attributed it to the slowdown in the sowing season and higher imports.

Devendra Pant, chief economist at India Ratings & Research, said, “Supply-side issues, ie, reduction of gas supply and high energy cost, have been adversely impacting fertiliser production, following the West Asia conflict outbreak.”

Natural gas production declined 4.9% in August, while coal output fell 3.8% and crude oil production contracted 3.6%.

“Slowdown in coal was mainly due to base effect and partially due to rainfall impacting mining activities,” Pant said.

The weakness in energy-related sectors was offset by strong growth in cement and electricity, which helped drive overall core sector growth.

Cement recorded the strongest growth, rising 12.5% year-on-year in August, slightly lower than 12.7% in July. Electricity generation grew 11.6% in August compared with 8.4% in the previous month.

Iron ore production rose 5.5% year-on-year in August, followed by steel (3.4%), and refinery products (2.6%).

“Higher growth in refinery products was due to exports and domestic consumption,” Sabnavis said.

Cumulative core sector growth during April-August rose to 4.3% from 2.4% in the same period last year.

The core sector accounts for 40.27% weight in the Index of Industrial Production (IIP).

ICRA expects IIP growth to ease to 5-6% in August, while Bank of Baroda projects 6-6.5%. IIP growth stood at 6.7% in July.