Growth of the eight core industries eased to 6.3% year-on-year in May from 6.7% in April, mainly due to slower growth in steel, refinery products, and crude oil output, data released by the commerce ministry showed on Friday. In May 2023, the core sector had grown 5.2%.
On a sequential basis, however, the core sector’s output rose 3.7% in May. Typically, output in May increases from April. The month-on-month growth this year, however, was lower than the average growth of 6.8% recorded between the two months in the past 12 years.
“A combination of factors, including the heatwave over parts of the country and the phased parliamentary elections, could have curtailed activity and execution in some sectors,” said Aditi Nayar, chief economist, Icra.
As against the pre-Covid level, growth in May was 24.9% higher, but the trend was not uniform across all sectors, noted India-Ratings and Research (Ind-Ra). Coal, crude oil, refinery products output was up by just 7.9%, 3% and 10% than the pre-pandemic level, respectively.
“On the whole, both in growth and level terms, it appears that a broad-based recovery on a continued basis is some distance away,” Ind-Ra said.
Coal output grew 10.2% on year during May, at a three-month high, while natural gas output rose by 7.5%. The steel sector’s output grew at a robust 7.6% on year in May, showing a continuity in construction activity mainly supported by government capex.
Electricity output, meanwhile, was sharply up at a seven-month high of 12.8%, as May recorded a high power demand.
As heatwave conditions continued in the country in June too, electricity and coal production are expected to remain steady at around 8% in June, say economists. Also, the IIP growth in May is likely to be around 5%, they say.