In December 2023, the growth of crucial infrastructure sectors hit a 14-month low, registering a mere 3.8 percent increase. The official data released on Wednesday highlighted underwhelming performances in sectors such as crude oil, electricity, steel, and cement.
Compared to the robust 7.9 percent growth in November and 8.3 percent in December 2022, the core sector, encompassing coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity, experienced a significant slowdown. The last recorded low was at 0.9 percent in October 2022.
The cumulative growth of these eight sectors remained stagnant at 8.1 percent year-on-year for the period from April to December 2023-24. However, the production growth rates for coal, refinery products, fertilizers, steel, cement, and electricity decelerated notably in December 2023.
During this period, natural gas output bucked the trend, rising by 6.6 percent, a notable improvement from the 2.6 percent recorded in December 2022.
Given that these eight core sectors contribute a substantial 40.27 percent to the Index of Industrial Production (IIP), the slowdown is a matter of significance. Crude oil output, in particular, experienced a decline of 1 percent in December of the previous year.
In December 2023, the growth rates in electricity, steel, and cement production slowed to 0.6 percent, 5.9 percent, and 1.3 percent, respectively, compared to the more robust figures of 10.4 percent, 12.3 percent, and 9.5 percent in December 2022.
Aditi Nayar, Chief Economist, Head of Research & Outreach at Icra Ltd, emphasized that the core sector expansion had halved, reaching a 14-month low. She projected a bleak 1-3 percent expansion in the Index of Industrial Production (IIP) for December 2023 following the tepid core sector growth.
(With Agency Inputs)
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