India’s eight core sectors’ output growth spurted to a three-month high of 6.7% in February, led by double-digit upticks in coal, natural gas and cement even as fertilisers’ production fell 9.5% to record the sharpest contraction since May 2021.
January’s Index of Core Industries (ICI) was revised to reflect a 4.1% rise, compared with the previous estimate of 3.6%, but that remained the slowest growth in 15 months. This is the second month in a row that fertilisers output dipped year-on-year, and marks the first such streak in two years.
In absolute terms, overall output levels were at a three-month low and 4.9% below January’s levels, which had marked a ten-month high. In sequential terms, the only segment to record an uptick over January’s production level was Cement (up 1.74%).
In year-on-year terms, crude oil production grew at an all-time high pace of 7.9% in February, although that was aided by base effects as output had dropped 4.9% in the same month last year.
Natural gas output grew 11.3%, which was the highest in two years. The upticks in February also marked a four-month peak for Cement (10.2%), Electricity (6.3%), and Coal (11.6%).
While Steel production growth eased slightly to 8.4% in February, refinery products recovered from a 4.3% contraction in January to rise 2.6%.
The ICI has a weightage of slightly over 40% weightage in the Index of Industrial Production (IIP) so economists expect industrial output growth to recover from the 3.8% uptick recorded in January.
ICRA chief economist Aditi Nayar reckoned the IIP would record an expansion of 6%-6.5% in February, while Bank of Baroda’s chief economist Madan Sabnavis pegged it in the range of 4% to 5%.
“The 6.7% uptick in February reversed the declining trend seen in December and January and cumulative growth so far in 2023-24 has been smart at 7.7%, coming over the 6.8% growth last year,” Mr. Sabnavis said.
CareEdge Ratings’ chief economist Rajani Sinha said IIP growth may pick up to around 5.5% in February, while India Ratings and Research projected it to rise 5%. As both the Union and State governments rushed to meet their capex targets in March, the core infrastructure sectors’ growth is expected to stay around 6% this month as well, said India Ratings’ economists Sunil Kumar Sinha and Paras Jasrai.
