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Data released by the commerce and industry ministry on Friday showed the eight coresectors, spanning cement, coal, crude oil, electricity, fertilisers, natural gas, petroleum and refinery products, steel, grew 12.1% in August, higher than the 8.4% in July and above the 4.2% in August last year.Five out of the eight sectors posted double digit growth. Cumulative growth between April to August was at 7.7%.
The core sector accounts for nearly 41% of the index of industrial production (IIP) and a strong outcome has a positive impact on IIP numbers. The cement sector rose an annual 18.9% in August compared with a 6.9% expansion in July. The coal sector grew 17.9% in August, higher than the 14.9% posted in July while the electricity segment surged 14.9% during the month compared with a growth of 8% in the previous month.
“A truant monsoon helped to push up core sector growth to a robust 12.1% in August 2023, boosted by double-digit expansion in five of the eight components, except fertilisers, crude oil and refinery products, with the latter nonetheless recording a robust 9.5% increase,” said Aditi Nayar, chief economist at ratings agency ICRA.
“Given the uptick in the core sector growth, as well as healthy performance of high frequency indicators such as auto output, GST e-way bills, rail freight etc, we forecast the IIP to expand by 9-11% in the month of August 2023,” said Nayar. The industrial sector has made a swift recovery after the crushing impact of the Covid-19 pandemic and several indicators have pointed to a robust expansion powered by domestic demand.
Economists and several agencies have said they expect the Indian economy to be a bright spot as the global slowdown hurts expansion in several developed and emerging economies. The government expects GDP growth to touch 6.5% in the current fiscal year against the backdrop of slowing global growth.
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