Positive production of natural gas, electricity and steel fuels India’s core sector growth to 6.2% in April.

India’s core infrastructure sectors grew 6.2% in April due to high production of natural gas, electricity and steel, according to data released by the Ministry of Trade and Industry on Friday.

In March, eight key infrastructure sectors – coal, oil, steel, cement, electricity, fertilizers, refined products and natural gas – grew 5.2%. In data released for April, this figure was later revised to 6%.

According to data from the commerce ministry, output growth in eight key industries was 7.6% in FY24, the slowest in three years.

However, FY24 was better than most years of Prime Minister Narendra Modi’s government, except FY22 and FY23, which had growth rates of 10.4% and 7.8%, respectively.

The ministry reported that in April 2023, the growth of the base sector amounted to 4.6%, benefiting from a lower base and translating into a higher growth of the index in the analyzed month.

“The primary sector data is very encouraging, with growth increasing from 5.2% in March 2024 to 6.2% in April 2024. This positive trend is expected to significantly boost quarterly GDP figures in the current quarter,” he said Ajay Sahai, Director General, Federation of Indian Export Organizations (FIEO) – a body of the Ministry of Commerce.

“We project GDP growth of over 8% in the current fiscal year, building on the impressive GDP growth of 8.2% recorded in 2023-24. This continued strong performance strengthens our position as one of the fastest growing economies in the world,” Sahai said.

Shrinking industries

While fertilizer production fell by 0.8%, there were also signs of a slowdown in cement, coal and oil production. Oil production fell month-on-month from 2% in March to 1.6% in April. Similarly, cement production fell sharply from 10.6% in March to 0.6% in April, and coal production fell from 8.7% to 7.5% during the same period.

However, natural gas, refined products, steel and electricity contributed to single-digit growth in the primary sector.

In April, electricity (19.85% index weight) fueled production growth in key industries, with output rising 9.4%. According to ministry data, steel production increased by 7.1% from 6.4% in March.

Additionally, the production of natural gas increased by 8.6%, refinery products by 3.9% and steel by 7.1%. While both coal and oil production declined month-on-month, they remained positive, pointing to potential growth in the coming months.

The fall in fertilizer prices (-0.8%) did not affect the production rate of the eight main industries, given its lowest share of 2.63%. Refined products growth remained moderate for most of FY24, with a surge only in August and November.

Throughout the year, all primary sector industries recorded decent growth, except oil, which saw stagnant production (0.6%). On a positive note, crude oil production in FY24 has jumped into the positive zone for the first time since FY13.