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Core sector growth of 8.2% in June

India’s eight core sectors posted growth of 8.2 percent in June, according to data released by the Ministry of Commerce and Industry on July 31.

At 8.2 percent, the growth in India’s eight key infrastructure sectors—coal, crude oil, steel, cement, electricity, fertilizers, refinery products, and natural gas—in June was the highest in five months.

Core sector growth for May has been revised up to 5.0 percent from 4.3 percent.

For April-June, core sector growth has been 5.8 percent, down from 13.9 percent in the first three months of 2022–23.

The sharp improvement in performance last month was due to improved output growth in six of the eight sectors, with only fertilizer and cement output growing at a slower pace in June compared to a year-on-year basis. However, cement production still grew at an impressive 9.4 percent, while fertilizer output was up 3.4 percent, down from 9.7 percent growth in May.

Of the other six sectors that saw improved performance in June, crude oil output contracted again, this time by 0.6 percent, compared to a fall of 1.9 percent in May.

“The tardy onset of the monsoon contributed to an improved performance of electricity, coal, etc.,” noted Aditi Nayar, chief economist at ICRA.

Electricity production was up 3.3 percent in June compared to a growth of 0.8 percent in May, while coal output increased by 9.8 percent. The sector to post the highest growth output jumped by 21.9 percent, double the May growth rate of 10.9 percent.

With the eight core industries making up more than 40 percent of the weight of the Index of Industrial Production, Nayar expects industrial growth in June to be in the range of 4-6 percent “in spite of the moderation in the year-on-year performance of several available high-frequency indicators”.

India’s industrial output had grown by 5.2 percent in May, as per data released on July 12, 2023. The data for June will be released on August 11.

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