Core growth hits 15-month low of 3.6% in January, high base weighs

India’s core sector expanded 3.6% in January, its slowest pace in 15 months, weighed down by a high base and mixed performance across sectors, according to government data released on Thursday.

The core sector had grown 4.9% in the previous month and 9.7% a year earlier.

“Core sector output slowed to a 15-month low of 3.6% in January owing to a slightly unfavourable base. This also follows an upwardly revised 4.9% growth in the previous month,” said Rajani Sinha, chief economist, CareEdge.

Sequentially, growth slowed to 2.2% in January from 7% the previous month.

The slow growth in the eight core industries – cement, coal, crude oil, electricity, fertilisers, natural gas, refinery products and steel – is likely to be reflected in industrial output as well. These sectors have over 40% weight in the Index of Industrial Production (IIP). “We could expect IIP growth to be 2-3% this month. We do not expect any resurgence in consumer goods production this month and hence (growth) will be muted,” said Madan Sabnavis, chief economist, Bank of Baroda.

Growth in three of the eight industries slowed in January, while two contracted. In the first ten months of FY24, the core industry growth was 7.7%, compared with 8.3% in the same period of FY23.

Slowing growth

Coal maintained double-digit growth of 10.2% for the seventh consecutive month in January but eased from 10.7% in the previous month.

Electricity production gathered pace, growing 5.2% compared with 1.2% in December. “This is reflective of steady demand for power from both businesses and households. In fact, in severe January winter, the demand for heating has gone up,” said Sabnavis.

Cement performed better, rising to a three-month high of 5.6% in January from 3.8% earlier.

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