April Sees a Surge in Core Sector Output with a 6.2% Increase

April’s core sector output has seen a notable rise of 6.2%, up from 6% in March, primarily driven by significant growth in the natural gas, refinery products, coal, steel, and electricity sectors. This increase, as reported by the commerce ministry, is partly attributed to the low base effect, considering the core sector’s growth was at 4.6% in April of the previous year. Despite this uptick, there was an 8.1% decline in output sequentially, marking the sharpest drop in a year, which aligns with the typical production contraction observed in April relative to March. Over the last dozen years, there has been an average 12.1% contraction between these two months.

Madan Sabnavis, the chief economist at Bank of Baroda, remarked that the growth rate for this single month has been significantly influenced by the base effects impacting various index components. He cautioned that due to reduced government spending amidst ongoing elections, the figures should be interpreted carefully. In April, coal and natural gas sectors experienced growth rates of 7.5% and 8.5%, respectively. A 7.1% increase in steel production suggests sustained investment in construction, largely bolstered by government capital expenditures, as noted by India Ratings and Research (Ind-Ra) economists. The combined capital expenditures of the central and 16 state governments surged by a robust 25.3%, reaching ₹1.12 trillion in April.

Economists anticipate that the core sector’s performance in April will bolster the overall industrial output, projecting an approximate 5% growth in the Index of Industrial Production (IIP) for the month. They forecast a core sector growth rate of about 6-7% for May.