The official data released on Tuesday shows that the growth of eight key infrastructure sectors in India has slowed down to a 4-month low of 8.1% in September 2023, compared to 8.3% in the same period last year. The output of refinery products, fertilizers, cement, and electricity has experienced a deceleration in growth, while crude oil output has actually seen negative growth.
It is important to note that these eight sectors contribute to 40.27% of the Index of Industrial Production (IIP). The previous low point was in May, when the growth rate of these sectors stood at 5.2%.
According to the data, crude oil output decreased 0.4% in September, compared to a contraction of 2.3% in the same month last year.
In August, the core sector growth reached 12.5%, the highest since June 2022, when it was 13.2%.
The output growth of these sectors in April-September 2023-24 also experienced a decline, reaching 7.8% compared to 9.8% in the same period last year.
In September, coal, natural gas, and steel production saw an increase of 16.1%, 6.5%, and 9.6% respectively.
The growth rate of refinery products, fertilizers, cement, and electricity slowed down to 5.5%, 4.2%, 4.7%, and 9.3% respectively in September 2023 compared to the corresponding figures of 6.6%, 11.8%, 12.4%, and 11.6% from the previous year.
Aditi Nayar, Chief Economist at Icra Ltd, attributed the slowdown in core sector expansion to a pick-up in rainfall, which was expected. She mentioned that the growth in cement production had sharply decelerated to a six-month low of 4.7% in September. Nayar believes that the growth of the Index of Industrial Production is likely to moderate to high single digits in September, following the trajectory of the core sector.
Overall, the data indicates a slowdown in the growth of key infrastructure sectors in India, with the refining, fertilizers, cement, and electricity sectors experiencing a notable deceleration.