The eight core industries saw a contraction in August, amidst an elevated base and excessive rainfall in parts of the country. The index of eight core industries contracted by 1.8% in August, its first decline in 42 months, after growing by 6.1% in July on an annual basis, according to data by the Office of the Economic Advisor, published on Monday.
Six of the eight industries saw contractions in August. Excess rainfall impacted mining activity, with the output of coal, crude oil, and natural gas declining while also leading to a contraction in electricity generation in the month, Aditi Nayar, chief economist at ICRA said. The decline in these sectors was accentuated by an elevated base, with deficient rainfall in August 2023 supporting the output of these sectors in that month, she explained.
Given these trends, ICRA expects IIP growth to slow down sharply to approximately 1% in August from 4.8% in July. Core sector output may remain lacklustre in September given the late withdrawal of the monsoon, before normalising in the third quarter of the current fiscal.Aditi Nayar, Chief Economist, Head-Research & Outreach, ICRA
Break-Up Across Eight Core Sectors In August (YoY)
Coal output fell 8.1% versus a rise of 6.8% in July.
Crude oil output falls 3.4% against a decline of 2.9% last month.
Natural gas output falls 3.6% after -1.3% previously.
Petroleum refinery products fell 1% after a rise of 6.6% in the previous month.
Fertiliser production rose 3.2% versus a rise of 5.3%.
Steel output rose 4.5% after rising by 6.4%.
Cement output fell 3% versus a rise of 5.5% in the last month.
Electricity output fell 5% after a rise of 7.9% in the previous month.
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