SME Futures Editorial
India’s core sector, which includes industries such as coal, electricity, steel, and cement, posted a growth of 3.1% in October 2024, marking an improvement over the 2% growth recorded in September, according to data released by the Commerce Ministry on Friday. The cumulative growth rate of the Index of Eight Core Industries (ICI) during April-October 2024-25 stood at 4.1%, compared to the same period last year.
Sector-Wise Performance
Coal production saw the highest growth among the core sectors, rising by 7.8% in October compared to the same month in 2023. Steel production also recorded a strong 4.2% growth, while cement production increased by 3.3%, supported by rising demand from infrastructure projects and an uptick in the real estate sector.
Fertiliser production showed a marginal increase of 0.4% during October 2024, reflecting stable agricultural demand. Electricity generation, a critical component with a weightage of 19.85% in the core index, grew modestly by 0.6% year-on-year.
Petroleum refinery production, the largest contributor to the core index with a weightage of 28.04%, rose by 5.2% in October, driven by heightened activity in the transport sector. Its cumulative index increased by 2.7% during the April-October period compared to the previous year.
However, crude oil production declined sharply by 4.8%, and natural gas production fell by 1.2% during the month, dragging down the overall growth.
Expert Analysis
Suman Chowdhury, Executive Director & Chief Economist at Acuité Ratings, noted the recovery in October as a positive development after a sluggish second quarter.
“Core sector growth has recovered to 3.1% YoY in October 2024 after a dismal Q2 (July-September 2024), where it slowed to 2.3%. One of the key segments that continue to constrain overall core output is the flattish trend in electricity generation, which can be attributed to late monsoon rains and the higher base of the previous year,” Chowdhury said.
He also highlighted the rebound in key sectors such as coal, refinery, and steel production. “There was a healthy revival in coal, refinery, and steel production in the previous month, reinforcing expectations of a pickup in industrial activity in Q3/Q4 after an unexpectedly weak performance in Q2,” he added.
Looking ahead, Chowdhury projected moderate growth for the fiscal year. “Given the base factor, the growth in the core sector is set to moderate in the current fiscal, but we expect it to improve to 4.5%-5.0% from the 4.1% YoY print seen in the April-October 2024 period.”
The Eight Core Industries, which account for 40.27% of the weight in the Index of Industrial Production (IIP), are critical indicators of India’s industrial growth trajectory. Despite some setbacks in crude oil and natural gas production, the sector’s October performance signals a recovery that could provide a boost to broader industrial output in the coming months.
