Author: Power Peak Digest Team Pub Date: January 2, 2025
Growth in the output of India’s eight key infrastructure industries, collectively known as the core sector, rose to 4.3% year-on-year (Y-o-Y) in November, marking a four-month high from the revised figure of 3.7% in October. This recovery follows a contraction of -1.6% in August, the first in 42 months. In November 2023, growth was recorded at 7.9%.
According to the data released by the Ministry of Commerce and Industry, the recovery in November was primarily driven by strong performances in cement (13%), electricity (3.8%), and fertilisers (2%). Sectors like coal (7.5%), refinery products (2.9%), and steel (4.8%) showed slower growth compared to October. Meanwhile, crude oil (-2.1%) and natural gas (-1.9%) output contracted during the month.
Aditi Nayar, Chief Economist at ICRA Ratings, attributed the growth partly to the fading impact of heavy rainfall in earlier months, with cement output seeing a sharp increase due to a low base effect. Core sector industries account for 40.27% of the weight in the Index of Industrial Production (IIP), making their performance significant for the index.
For the first half of the financial year (April-November), core sector growth was 4.2%, down from 8.7% in the same period of the previous year. Industrial production rose 3.5% in October, boosted by the core sector and the festival season.
Despite a slowdown in economic growth to a seven-quarter low of 5.4%, the recovery in core industries signals positive momentum. The Reserve Bank of India (RBI) has revised its GDP growth forecast for FY25 to 6.6% from an earlier estimate of 7.2%.