The growth of eight crucial infrastructure sectors witnessed a slowdown, reaching 6.7 per cent in February, as reported by official data released on Thursday. This deceleration was primarily attributed to the underperformance of sectors such as fertiliser. Despite the overall slowdown, there was a notable increase in growth compared to the preceding months, marking the highest sequential growth rate observed in the last three months.
In January, the growth rate of these eight core sectors stood at 4.1 per cent, contrasting with a robust 7.4 per cent recorded in February 2023. Cumulatively, the growth rate in the output of these sectors during April-January of the fiscal year saw a decline to 7.7 per cent, down from 8.2 per cent during the same period in 2022-23. Of particular concern was the negative growth in the output of fertiliser, further contributing to the overall slowdown.
These eight core sectors collectively account for 40.27 per cent of the country's Index of Industrial Production (IIP).
Analysis of the data revealed a decline in the growth rates of refinery products, steel, and electricity output during February. However, sectors such as coal, crude oil, natural gas, and cement witnessed healthy growth rates of 11.6 per cent, 7.9 per cent, 11.3 per cent, and 10.2 per cent respectively during the same period.
Aditi Nayar, chief economist and head of research & outreach at ICRA, noted that the core sector growth improved to a three-month high in February. Among the eight industries, coal, cement, and natural gas displayed double-digit expansion. She anticipated that with the healthy improvement in the core sector growth, the IIP is expected to record an expansion of 6.0-6.5 per cent in February 2024.
The summary of the Index of Eight Core Industries:
Cement: Cement production (weight: 5.37 per cent) increased by 10.2 per cent in February, 2024 over February, 2023. Its cumulative index increased by 9.1 per cent during April to February, 2023-24 over corresponding period of the previous year.
Coal: Coal production (weight: 10.33 per cent) increased by 11.6 per cent in February, 2024 over February, 2023. Its cumulative index increased by 12.1 per cent during April to February, 2023-24 over corresponding period of the previous year.
Crude Oil: Crude Oil production (weight: 8.98 per cent) increased by 7.9 per cent in February, 2024 over February, 2023. Its cumulative index increased by 0.5 per cent during April to February, 2023-24 over corresponding period of the previous year.
Electricity: Electricity generation (weight: 19.85 per cent) increased by 6.3 per cent in February, 2024 over February, 2023. Its cumulative index increased by 6.8 per cent during April to February, 2023-24 over corresponding period of the previous year.
Fertilisers: Fertiliser production (weight: 2.63 per cent) declined by 9.5 per cent in February 2024 over February, 2023. Its cumulative index increased by 4.1 per cent during April to February, 2023-24 over corresponding period of the previous year.
Natural Gas: Natural Gas production (weight: 6.88 per cent) increased by 11.3 per cent in February, 2024 over February, 2023. Its cumulative index increased by 6.0 per cent during April to February, 2023-24 over corresponding period of the previous year.
Petroleum Refinery Products: Petroleum Refinery production (weight: 28.04 per cent) increased by 2.6 per cent in February, 2024 over February, 2023. Its cumulative index increased by 3.8 per cent during April to February, 2023-24 over corresponding period of the previous year.
Steel: Steel production (weight: 17.92 per cent) increased by 8.4 per cent in February, 2024 over February, 2023. Its cumulative index increased by 12.9 per cent during April to February, 2023-24 over corresponding period of the previous year.