Core Sectors Grow At 6-Month High of 8.4% in April; Expand 4.9% in March

Eight infrastructure sectors grew by 8.4 per cent in April against 62.6 per cent expansion in the year-ago period, according to official data released on Tuesday. The output of eight infrastructure sectors of coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity had expanded by 4.9 per cent in March 2022.

The core sector had witnessed an exceptionally high growth rate of 62.6 per cent in April 2021 mainly due to the low base effect. The output of crude oil contracted by 0.9 per cent against a 2.1 per cent decline in April, the data showed.

The Index of Eight Core Industries (ICI) measures combined and individual performance of production in selected eight core industries — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity. The eight core industries comprise 40.27 percent of the weight of items included in the Index of Industrial Production (IIP).

“Final growth rate of the Index of Eight Core Industries for January 2022 is revised to 4.0 per cent from its provisional level 3.7 per cent. The growth rate of ICI during April-March 2021-22 was 10.4 per cent (P) as compared to the corresponding period of last FY,” according to an official statement released on Tuesday.

Sunil Kumar Sinha, principal economist at India Ratings and Research, said, “The core sector data shows that infrastructure industries grew by 8.5 per cent year-on-year in April 2022 (4.9 per cent in March 2022 and 62.6 per cent in April 2022), a six-month high.”

He added that except crude oil and steel, all other infrastructure industries recorded a positive yoy growth in April 2022. Crude oil despite a low base (contraction of 2.1 in April 2021) recorded a yoy growth of -0.9 per cent. “Crude oil output has been weak for quite some time and has been in contraction now for 53 months. This means country’s dependence on global crude oil will be even higher, which is on the boil leading to imported inflation and its associated consequences for the economy.”

Sinha also said the growth in core sector was led primarily by a record y-o-y growth of 28.8 per cent in coal output. The other sectors that witnessed high growth as per the latest data were electricity (10.7 per cent), petroleum & refinery products (9.2 per cent) and fertilisers (8.7 per cent). Notably, output growth in electricity and petroleum & refinery products were on a high base and at an 8-month and 6-month high respectively.

Though coal and fertilisers recorded impressive annual growth in April 2022, when compared against the pre-COVID level (February 2020), they still have some grounds to cover as they are only 85.4 per cent and 89 per cent of the pre-COVID level respectively. Production of other core segments are also just crossed the pre-COVID-19 level alluding to the weak recovery across various infrastructure sectors. Ind-Ra expects the IIP growth at around mid-single-digits in April 2022.

(With inputs from PTI)

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