Production of eight infrastructure industries — the core sector — expanded 7.8 per cent year-on-year (YoY) in January, its fastest pace in four months, owing to a lower base and a near all-round showing. Seven of the eight industries reported output growth.
The data released by the industry department on Tuesday showed greater acceleration over the previous month in the output of five sectors like coal (13.4 per cent), electricity (12 per cent), natural gas (5.3 per cent), refinery products (4.5 per cent) and fertilisers (17.9 per cent). Growth in steel (6.2 per cent) and cement (4.6 per cent) decelerated over the previous month but remained in expansion territory. The crude oil industry, however, contracted for the eighth consecutive month. The output shrunk by -1.1 per cent YoY.
Madan Sabanvis, chief economist, Bank of Baroda, said growth in fertilisers was due to supplies for non-farm sectors, as well as replenishing inventory, whereas growth in the steel and cement sectors was due to infrastructure activity taking off largely due to push by the Centre. “Growth in coal and electricity was indicative of steady industrial activity during the month. Higher power demand indicated high growth in the services sector. With the roads, railways, and metals segments witnessing traction, it is good sign for the economy on the investment front,” Sabanvis said.
The eight core industries account for 40.27 per cent of the weighting of the items included in the Index of Industrial Production (IIP). Growth in January came in the wake of the 7 per cent increase in December that was on the basis of positive expansion in seven of the eight industries.
“With these figures, IIP growth for the month (January) can be expected at 5-6 per cent,” added Sabanvis.
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The cumulative growth rate of the Index of Core Industries (ICI) during April-January 2022-23 was 7.9 per cent YoY (provisional).
The data for core industries came on the same day the data on quarterly estimates of gross domestic product (GDP) for the third quarter (October-December), 2022-23, was released by the Ministry of Statistics and Programme Implementation (MoSPI). It showed that the Indian economy grew by 4.4 per cent in the third quarter. Still, in the current financial year, India's gross domestic product (GDP) is expected to grow at 7 per cent.
In the first Advance Estimates released in January, too, MoSPI estimated GDP growth in FY23 at 7 per cent, marginally higher than projections by the Reserve Bank of India (RBI) and World Bank at 6.8 per cent and 6.9 per cent, respectively.