Core sectors’ output hit a seven-month high in December

Cement output growth eased from a sharp 13.5% uptick in November to 4% in December, but this was largely due to base effects from a year ago, with production volumes actually jumping 12.4% over the previous month. 
| Photo Credit: The Hindu

Output in India’s eight core infrastructure sectors hit a seven-month high in December, even as year-on-year growth moderated a tad from an upgraded 4.4% in November to 4%.

Seven of the eight sectors that account for about 40% of India’s industrial production, recorded an improvement over December 2023 levels, with crude oil breaking a seven-month contraction streak with a minor 0.6% uptick. Natural gas production, however, fell for the sixth straight month, with a 1.8% dip.

However, in sequential terms, all eight segments posted higher production than November, with coal, steel and cement output at their highest levels since March 2024, while refinery products and fertilisers hit at least 13-month peaks. The Index of Core Industries (ICI) was at 167.6 points, 6.75% over November, and the highest level since May’s 168.2 score.

In November 2024, six core sectors had clocked sequential declines, with just refinery products and coal recording an uptick over October.

Electricity generation and steel production was 5.1% higher than a year ago, while coal output growth eased to a three-month low of 5.3%.

Cement output growth eased from a sharp 13.5% uptick in November to 4% in December, but this was largely due to base effects from a year ago, with production volumes actually jumping 12.4% over the previous month.

For the first nine months of 2024-25, core sectors have now recorded a growth of just 4.2%, almost half the 8.3% rise over the same period of 2023-24, with all eight sectors reporting significantly slower upticks than last year. Crude oil output, which had contracted 0.3% in April to December 2023, has tanked 2.1% so far in 2024-25.

Rating agency ICRA’s chief economist Aditi Nayar reckoned that growth in the Index of Industrial Production (IIP) could moderate somewhat to around 3%-5% in December 2024 from 5.2% in November 2024, partly on account of an unfavourable base. The IIP had risen 2.5% in November 2023 and 4.4% in December 2023.