Core sector grows by 6.3% in May; power, coal, steel record higher output

India’s core sector growth eased to 6.3% in May as against the revised figure of 6.7% for the previous month, due to contraction in the cement industry and easing growth in the steel sector, latest government data released on June 28 said.

The combined Index of Eight Core Sector Industries measures the output of key sectors – cement, coal, crude oil, electricity, fertilisers, natural gas, refinery products and steel – which have a 40% weight in the Index of Industrial Production (IIP).

The slight moderation in core sector growth is likely to be a drag on industrial expansion, according to experts, who also indicated that the fillip to consumer durable demand owing to the heatwave will likely keep the latest IIP reading higher at around 5%.

Sequentially, growth in the index of eight core industries that represent infrastructure output was up 3.7%.

Three of the eight industries contracted in May, compared with two facing contraction in the previous month.

The data comes just days before the government presents its first budget.

Experts indicate that the government will likely continue its push on capex, which is expected to further impetus infrastructure growth.

One of the demands of the industry is to increase capex spending to 25% of the previous year spend of Rs 9.5 lakh crore, compared with 17% in the interim budget.

India’s growth prospects are improving as the Reserve Bank of India recently revised the FY25 growth forecast upward to 7.2% from 7% earlier.