Cement production bucks broader slowdown in Sept core sector output

Out of the eight key infrastructure sectors, three sectors — crude oil, natural gas and electricity — recorded contraction in September, while coal, refinery products, fertilisers, steel and cement were in the positive territory.

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Cumulatively so far in this financial year, core sector output has grown 4.2 per cent during April-September as against 8.2 per cent in the year-ago period.

India’s core sector output grew 2 per cent year-on-year in September after posting a contraction of 1.6 per cent in August, the lowest level seen in 42 months, data released by the Ministry of Commerce and Industry showed Wednesday. The rise was mainly driven by a pickup in cement production even as the overall core output for eight key infrastructure sectors remained below the level of 9.5 per cent seen in September 2023, the data showed.

Out of the eight key infrastructure sectors, three sectors — crude oil, natural gas and electricity — recorded contraction in September, while coal, refinery products, fertilisers, steel and cement were in the positive territory. The core sector output is significant as the eight core industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP) — an indicator of the industrial sectors in the country.

Among the eight core sectors, steel output rose by 1.5 per cent in September, the slowest pace in 33 months, while cement production grew 7.1 per cent in September, the highest level in six months. Fertilisers output grew 1.9 per cent in September as against 3.2 per cent in August and 4.2 per cent in the year-ago period. Coal output grew 2.6 per cent in September as against (-)8.1 per cent in August and 16 per cent in the year-ago period, while refinery products output grew 5.8 per cent in September as against (-)1 per cent in August and 5.5 per cent a year ago.

Crude oil output continued to be in the negative territory for the fifth consecutive month at (-)3.9 per cent in September. Natural gas output also contracted by 1.3 per cent in September, while electricity output contracted by 0.5 per cent.

Cumulatively so far in this financial year, core sector output has grown 4.2 per cent during April-September as against 8.2 per cent in the year-ago period.

Experts said the disruption caused by heavy rainfall eased, leading to an improvement in mining and electricity sectors’ output. “The easing of the disruption related to rainfall on sectors like mining and electricity contributed to the turnaround in the core sector’s performance to a growth of 2.0 per cent in September 2024 from the mild contraction of 1.6 per cent in the previous month. The disaggregated trends are relatively healthy, with a sequential improvement in the YoY growth of five of the 8 sectors,” Aditi Nayar, Chief Economist, ICRA said.

Nayar said the IIP is expected to grow by around 3-5 per cent in September, amid a narrower contraction in electricity and mining output, as well as a favourable base, and a sharp uptick in the growth in GST e-way bills to 18.5 per cent in September from 12.9 per cent in August, supported by pre-festive stocking. India’s factory output, as measured by the IIP, had contracted by 0.1 per cent in August for the first time after a gap of 21 months led by a high base effect along with a decline in mining and electricity output.