India’s Core Sector Growth Slows to 2.9% in February

Growth Slows in Key Industries

India’s core sector growth slowed to 2.9% in February, down from 4.6% in January, according to data released by the Ministry of Commerce & Industry. This marks the fifth consecutive month of expansion, but at the slowest pace in five months.

Despite this, six out of the eight core industries recorded positive growth. Cement and fertilizer sectors showed the highest expansion, while crude oil and natural gas production declined further.

Sector-Wise Performance

Strong Growth in Cement and FertilizersCement output saw the highest growth at 11%, making it the strongest performer in February.

Fertilizer production also showed robust growth, increasing by 10%.

Cement output saw the highest growth at 11%, making it the strongest performer in February.

Fertilizer production also showed robust growth, increasing by 10%.

Decline in Crude Oil & Natural Gas

Crude oil production shrank by 5%, deepening its contraction from the 1% drop in January.

Natural gas output fell by 6%, following a 2% decline in January.

Slower Growth in Coal, Steel, and Refinery Products

Coal production grew by just 2%, a drop from 5% growth in January, marking its weakest performance in six months.

Steel output expanded 6%, but growth slowed from 4% in January.Petroleum refinery products saw a marginal 1% rise, compared to 8% in January.

Petroleum refinery products saw a marginal 1% rise, compared to 8% in January.Electricity Generation Maintains Momentum

Electricity Generation Maintains Momentum.

Electricity production increased by 3%, showing an improvement over its 1% rise in January.

Core Sector’s Impact on Industrial Growth

The core sector contributes 40% to the Index of Industrial Production (IIP), making it a crucial indicator of overall industrial growth. With weaker momentum in February, experts believe India’s manufacturing sector may experience slower growth in FY25 after achieving double-digit expansion in the previous year.

Government data predicts manufacturing will grow by 4.3% in FY25, a sharp decline from 12.3% growth in the last fiscal year.

Capex Challenges Weigh on Growth

One of the reasons behind the slowdown is lower capital expenditure (capex) growth. The government revised its FY25 capex target to Rs 10.2 lakh crore, down from the Rs 11.1 lakh crore originally announced in the Budget.

So far, Rs 8.1 lakh crore has been spent in April-February, leaving the government with a Rs 2.1 lakh crore gap to fill in March 2025.

State-level capital spending has also remained subdued, with lower outlays in the first nine months of the fiscal compared to the previous year.

Conclusion

India’s core sector growth has hit a five-month low, reflecting challenges in industrial production and capital investment. While cement and fertilizers continue to perform well, crude oil, natural gas, and coal are struggling. With muted capex growth and weaker manufacturing projections for FY25, the economy may face a tough road ahead.