Growth in eight core infrastructure industries registered a four-month high in January this year at 7.8% with seven of the eight sectors witnessing positive growth amidst the higher capex push by the government and aided by a favourable base effect. It grew by 4% in January 2022 when the economy was still reeling from the pandemic and the third wave of infections was underway. Previously, the eight core industries posted a high growth of 8.3% in September 2022.
Given that these core sectors have a combined weight of 40.3% in the index of industrial production (IIP), analysts expect IIP growth in the month to be at a robust 5% to 6% as against 4.3% growth in December.
According to the data released by the ministry of commerce and industry on Tuesday, the core sector growth for December has been revised downwards to 7% from 7.4% earlier.
The cumulative growth rate of the index of eight core industries during April-January 2022-23 was 7.9% as against 11.6% a year ago, said an official statement.
In January 2023, three of the industries including fertilisers, coal and electricity registered double digit growth. Coal production grew by 13.4% in January while electricity generation registered a 12% growth. Madan Sabnavis, chief economist, Bank of Baroda, said this is indicative of steady industrial activity during the month. “Higher power demand is also associated with high growth in the services sector,” he noted.
Fertiliser production grew by 17.9% in January following a contraction of 2% in January 2022. “This growth should be interpreted as providing supplies mainly for non-crops as well as replenishing inventory,” Sabnavis said.
With the government focus on investments in infrastructure, steel and cement production grew by 6.2% and 4.2% respectively in January. However, crude oil production remained in contraction and registered a de-growth of 1.1% in January 2023. Refinery production grew by 4.5% in January and analysts attributed this to both exports and domestic demand remaining high.