Output from India’s eight core sectors grew 6.1% in July, rebounding from a blip in June when growth had slid to a five-month low of 5.1%, as per data released by the Commerce and Industry Ministry on Friday (August 30, 2024).

The Ministry had earlier pegged June’s core sectors’ growth at 4%, the lowest in 20 months, and the revision was largely driven by a sharp revision in steel output numbers, which now reflect a 6.7% growth compared with a 27-month low of 2.7% estimated earlier. Electricity generation numbers were also revised for June to show a 8.6% rise, compared with 7.7% estimated earlier.

In July, electricity production slipped to a 6-month low growth pace of 7%, while natural gas production contracted for the first time in well over a year, shrinking 1.3%. Coal output growth eased to 6.8%, the lowest in at least 13 months.

Crude oil production continued to drop for the third straight month, with the decline deepening to 2.9% from a year ago. Despite these weakening trends, the Index of Core Industries (ICI) was lifted by a 6.6% jump in refinery products, the fastest rise in eight months, and expansion of fertiliser output hitting a seven-month high of 5.3%.

Steel and cement production also gathered momentum, rising at a three-month high rate of 7.2% and a four-month peak of 5.5%, respectively.

Most economists noted that July’s core sector rebound was not broad-based.

“The key segments that have driven the growth of core output in July are the oil reneries, fertilizers and steel,” said Suman Chowdhury, ED and chief economist Acuité Ratings & Research. “We expect core sectors’ growth to average between 5.5% and 6% this year, given the pick-up in public capital expenditure.”

The ICI constitutes a tad over 40% of the Index of Industrial Production (IIP). IIP growth had slid to a five-month low of 4.2% in June, but the significant revision in the core sectors’ index for the month, suggests an upgrade is likely when the National Statistical Office releases the July IIP numbers on September 12.