Wednesday, 09 Oct, 2024
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The deceleration in growth can be attributed to a high base effect and reduced power demand because of the monsoon season. Output growth was 6.4 percent in May 2024, compared to 8.4 per cent in June 2023.
India’s core sector growth fell to a 20-month low of 4 per cent in June, down from 6.4 per cent in the previous month, according to the latest data released by the ministry of commerce and industry on July 31. The decline was driven by a slowdown in five of the eight industries that form the core sector index. The Index of Eight Core Industries—which includes coal, crude oil, steel, cement, electricity, fertilisers, refinery products, and natural gas—accounts for 40 percent of the Index of Industrial Production (IIP).
In June, electricity output grew by 7.7 per cent, down from 13.7 per cent in May, while steel production rose by 2.7 per cent, compared to a 6.8 per cent increase the previous month. Natural gas output expanded by 3.3 per cent, a decline from 7.5 per cent growth in May. On the contrary, output in crude oil and refinery products contracted to 2.6 per cent and 1.5 per cent, respectively, in June. Crude oil output had decreased by 1.1 pr cent in May, while refinery products saw a 0.5 percent increase that month.
Experts consider the 4 per cent growth in the core sector, achieved against a high base of 8.4 per cent, to be satisfactory. The lower growth rates of 2.7 per cent in steel output and 1.9 per cent in cement are attributed to the elevated base figures from the previous year—21.3 per cent and 9.9 per cent, respectively—and subdued government spending on capital projects, possibly influenced by the election cycle (general elections held in April-June 2024) . This will reverse and pick up in the coming months.
India's manufacturing sector fell to a three-month low in May but rebounded in June, buoyed by a rise in new orders, output, and a record increase in employment, according to the HSBC India Manufacturing Purchasing Managers Index (PMI) released in early July.
The International Monetary Fund (IMF) has projected a robust 7 per cent growth for India in FY25, slightly below the stronger-than-expected 8.2 per cent expansion recorded in FY24.
