Growth in the primary sector rose to 6.2% in April.

Thanks to strong conditions in the power generation, coal and natural gas sectors, output in eight key industries reached a three-month high of 6.2% in April 2024, higher than the upwardly revised output growth of 6% in March 2024.

The latest reading was significantly higher than overall growth in key industrial sectors in April 2023, which was 4.6%, according to official data released by the Ministry of Trade and Industry on Friday.

Taking into account the latest revision of the January 2024 and March 2024 readings, the overall growth of core industries for 2023-2024 has now been revised upwards to 7.6% (vs. 7.5% previously estimated) compared to a growth of 7.8% in the previous fiscal year.

In the month under review, apart from fertilizers (-0.8 percent), all seven major industries recorded positive growth.

However, key sectors such as growth in cement and steel production were impacted by a huge base effect, as well as less focus on government capital expenditure due to the seven-phase general elections that began on April 19.

While the cement sector recorded a moderate growth of 0.6%. (12.4%), steel production in April 2024 increased by 7.1%. (16.6%).

Eight major industries – coal, natural gas, petroleum, refined products, fertilizers, cement, steel and electricity – account for 40.27% of the weight of items included in the Index of Industrial Production (IIP).

The government has now revised upwards the output growth of eight key industries for January 2024 to 4.1%. Last month, the reading for December 2023 was revised upwards to 5%. Earlier, the government revised upwards the growth figures in key economic sectors for November 2023 to 7.9%. The monthly readings for September 2023 and October 2023 were also revised upwards in earlier months.

In April 2024, the production of the coal sector increased by 7.5%. (9.1% in April 2023); crude oil by 1.6 percent (-3.5 percent); natural gas 8.6 percent (-2.9 percent); refinery products – 3.9 percent (-1.5 percent); fertilizers -0.8 percent (23.5 percent); cement 0.6% (12.4%); steel – 7.1 percent (16.6%) and electricity – 9.4%. (-4.6%).

EXPERTS’ OPINION

Aditi Nayar, Chief Economist, Head Research and Outreach, ICRA Ltd, said primary sector expansion registered a mild growth to 6.2 per cent in April 2024, with improvement in sequential performance of five of the eight components offset by a sharp decline in cement growth to marginal 0 .6 percent with as much as 10.6 percent in the previous month, as well as more moderate declines in coal and crude oil prices.

“The decline in cement production growth in April 2024 partly reflects a high base, but may also be dampened by some slowdown in government fiscal spending during the general elections.

However, the steel sector recorded a healthy growth of 9.4% in April 2024, which may be supported by consumer durables,” she said.

Madan Sabnavis, chief economist, Bank of Baroda, said the 6.2% growth in April 2024 was quite strongly driven by base effects for several index components. “April was a time when the government was less focused on spending, given the ongoing elections. So the numbers need to be read carefully,” Sabnavis said.

“In April, we can expect IIP growth to be around 6-6.5 percent.”

Sabnavis highlighted that last year, electricity production reached a high of 9.4 percent and exceeded negative growth of 1.1 percent. “This increase was driven by higher demand resulting from the heat wave, as well as continued business activity,” he said.