According to data released on March 20, India’s core sector growth fell precipitously to a three-month low of 2.3% in February from 4.7% in January, driven down by weaker electricity generation and ongoing declines in oil and gas output.
Since two-fifths of the Index of Industrial Production is made up of the eight infrastructure sectors—coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity—the slowdown is a crucial indicator of more extensive industrial activity.
The significant slowdown in the rise of electricity output, which dropped from 5.2% in January to 0.5% in February, was one of the main causes of the moderation. The slowdown significantly affected the entire figure because electricity has a high weight of over 20%.
The two most promising industries were still steel and cement, but they both lost steam. Cement production increased by 9.3 percent in February, less than the 11.3 percent growth in January, while steel production increased by 7.2 percent in February as opposed to 11.5 percent in January.
The situation was still dire in the energy-related industries. Natural gas output decreased by 5% and crude oil production shrank by 5.2%, continuing a long-term downward trend. Following flat growth in January, refinery products likewise experienced a contraction, declining 1% in February.
Fertilizer production increased 3.4 percent, just less than the 3.7 percent gain in January, while coal output increased 2.3 percent, down from 3.1 percent the previous month.
According to the data, industrial activity is still supported by construction-related industries like steel and cement, but the headline print is being negatively impacted by weak energy production and slower growth in power.
The war in West Asia is predicted to have an impact on output, and the weakness is anticipated to persist in the upcoming months.
