India’s core Industries falls by 3.6% in May

The pace of growth of India’s infrastructure sector slowed to a 10-month low in May, dragged down by declining output of crude oil and natural gas and slower expansion of coal, steel and cement production.

The Index of Eight Core Industries grew 3.6% in May compared with 4.6% in April and 3.9% a year earlier, according to data released by the commerce and industry ministry on Monday. For April-May, the index recorded a growth of 4.1% as against 3.3% in the same period last year. The eight infrastructure sectors of coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity constitute 40.27% ofthe Index of Industrial Production.

Crude oil and natural gas output contracted 2.9% and 1.4% respectively in May from a year earlier. Coal output growth slowed to 12.1% in May from 16% in April. Economists said the slowdown in coal output was due to disruptions caused by rains, while an unfavourable base effect led to cement production growth easing.

“Disaggregated data reveals mixed trends, with a sequential rise in growth of electricity, fertilisers and refinery products, accompanied by a decline in the pace of expansion of five items as well as contraction in two of the eight constituents, namely crude oil and natural gas,” said Aditi Nayar, principal economist at ICRA. The expansion of production of refinery products, steel and electricity was 4.9%, 0.5% and 3.5%, respectively, compared with 5.4%, 3.8% and 8.2%, respectively, a year earlier.

Fertiliser output rose 8.4% in May, a 26-month high, which, as per Sunil Kumar Sinha, principal economist at India Ratings and Research, was due to the onset of the kharif planting season.