Core sector growth at 3-month high of 6.7% in February

New Delhi: Output growth in eight core infrastructure sectors that include electricity, steel, cement and crude oil, accelerated to three-month high of 6.7% in February from 4.1% in the previous month, official data released on Thursday showed.

Sequential improvement was recorded in six out of the eight sectors. During the month of February growth rate in cement, coal, crude oil, electricity, natural gas and refinery products, were higher than January. Two sectors, fertilisers and steel, witnessed sequential deceleration.

Electricity generation, which has 19.85% weight in the Index of Eight Core Industries, witnessed 6.3% year-on-year growth in February. Cumulative year-on-year growth in the sector in the first 11 months of the fiscal stood at 6.8%, data released by the Ministry of Commerce & Industry showed.

Steel production, which has 17.92% weight in the index, jumped by 8.4% in February year-on-year. Cumulative growth in the sector in the April-February period of the current financial year stood at 12.9%.

Three of the eight core industries displayed a double-digit expansion in February 2024, namely, coal, cement and natural gas.

These eight core sectors contribute 40.27% to the Index of Industrial Production (IIP). “Given the healthy improvement in the core sector growth, we expect the IIP to record an expansion of 6.0-6.5% in February,” said Aditi Nayar, chief economist at ICRA.

Rajani Sinha, chief economist at CareEdge, said the robustness in the core sector has been supported by upbeat government capital expenditure (capex). “We could see the core sector growth improve further as private capex picks up in the coming quarters,” she added.