India's core sector grew at 6.7% in Feb

Core sector growth: India's core infrastructure sectors displayed promising growth, recording a surge of 6.7 per cent in February, the government release said on Thursday. This marks a significant uptick, representing the fastest pace of expansion in three months for these vital industries, which collectively contribute a substantial two-fifths to the country's industrial output.

“India’s core sector growth accelerated to a three-month high of 6.7 per cent (y-o-y) in February aided by a slightly favourable base effect. While coal, natural gas and cement sectors logged double-digit growth, contraction in fertilizers output widened sharply to 9.5 per cent. With the uptick seen in the core sector, we expect the IIP growth to improve to around 5.5 per cent in February (from 3.8 per cent in the previous month),” Rajani Sinha, Chief Economist of CareEdge said. 

The positive momentum extends from January, when the growth rate for these key infrastructure sectors was revised upwards to 4.1 per cent, indicating a strengthening trajectory. Comparatively, February 2023 saw a growth rate of 7.4 per cent, underlining the sector's resilience and capacity for recovery.

“Core sector output picked up and came in at 6.7 per cent yoy in February 2024. This is higher than Ind-Ra’s expectations of 5 per cent. Barring fertilizers, the output of all the infrastructure industries witnessed a positive yoy growth in February 2024. Overall, the core sector output growth for 11MFY24 stands at 7.7 per cent,” Sunil Kumar Sinha (Senior Director & Principal Economist) & Paras Jasrai, Senior Analyst at India Ratings and Research said. 

 According to Sinha, healthy yoy growth in coal, natural gas, cement, steel and crude oil propelled the core sector to a three-month high in February 2024. Coal, natural gas and crude oil grew 11.6 per cent (four-month high), 11.3 per cent (two-year high) and 7.9 per cent (record-high partly due to base effect) respectively. The robust yoy growth of steel and cement at 10.2 per cent yoy and 8.4 per cent yoy respectively indicates sustained traction in construction activity supported by the government capex.