India's core sector growth rebounds to 1.8% in November
What's the story
India's core sector, which includes eight key infrastructure industries, witnessed a modest recovery in November with a growth rate of 1.8%. The data released today showed that the sector had contracted in October. The recovery was mainly driven by an increase in steel and cement production, providing some respite after months of inconsistent performance across these vital sectors.
Yearly trends
Core sector's mixed performance throughout the year
The eight core industries, which account for nearly 40% of the Index of Industrial Production (IIP), have been fluctuating between growth and contraction this year. In August, a robust growth of nearly 7% was recorded due to double-digit growth in coal and electricity. However, this momentum has been declining steadily since then.
Sectoral growth
November's recovery driven by construction and infrastructure activity
The improvement in November was mainly due to increased construction and infrastructure activity. Steel and cement production saw a strong rise, indicating sustained demand as the economy enters an investment-heavy year-end period. Fertilizer production also witnessed healthy growth, driven by seasonal rural demand ahead of the rabi sowing cycle and a favorable base effect.
Ongoing challenges
Growth remains uneven amid challenges
Despite the recovery, it is important to note that the core sector's growth remains uneven. Crude oil and natural gas production continue to decline, extending a long-term downtrend due to aging fields and limited new capacity additions. Electricity generation, which was a major growth driver earlier this year, has become volatile in recent months due to changing weather patterns and softer demand after the monsoon peak.