Output of eight infrastructure industries – the core sector – slowed marginally to 3.5% in April, from 3.6% in March, the slowest pace in the past six months, owing to the contraction in electricity, refined products, natural gas, and crude oil sectors, according to data released by the National Statistical Office (NSO) on May 31.
The eight core industries account for 40.27% of the Index of Industrial Production (IIP) for which April data will be released on June 12.
The core sector expanded by 9.5% in April 2022. On a sequential basis, the core sector index shrank by 8.6% in April for the first time since February.
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The moderation in core sector output was led by the contraction in four of the eight sectors in comparison to March.
Electricity production, with 19.9% share, declined for the second consecutive month by 1.4% in April, from 1.6% in March. This could be a result of low power demand due to a cooler than usual April.
For refined products, with 28% share, the production contracted by 1.5% from 1.5% growth in March. Natural gas, with 6.9% share, also contracted by 2.7% in April from 2.8% growth in March.
Production of crude oil, with 9% share, fell by 3.5% in April, from a 2.9% contraction in March. The other four sectors, steel (17.9% share), fertilizers (2.6%), cement (5.4%) and coal(10.3%) saw growth in April, and almost all, except coal, showed an acceleration relative to March.
“As in FY23, the robust yoy growth in the steel and cement sectors continues to receive support from the capex spend of union and state governments. The capital outlay of union and state governments (13 states, representing over 50% of all states capex) grew by a strong 12.1% yoy and 65.0% yoy respectively in April 2023,” said Dr. Sunil Sinha, principal economist, India Ratings and Research, in a note. “Ind-Ra expects the core sector to record a yoy growth of around 4-5% in May 2023,” Sinha added.