India's Core Sector Growth Contracts in August 2024
India's eight core sectors, which contribute significantly to the country's industrial output, witnessed a contraction in growth during August 2024. The output growth of these sectors declined by 1.8 percent year-on-year, compared to a robust 13.4 percent growth in the same period last year. This slowdown in growth is attributed to a decline in the output of several key sectors, including coal, crude oil, natural gas, refinery products, cement, and electricity.
The decline in coal production was particularly noteworthy, with output falling by 8.1 percent in August 2024 compared to a 17.9 percent expansion in August 2023. Crude oil production also dipped by 3.4 percent year-on-year during the month. The slowdown in these sectors reflects the broader challenges faced by the Indian economy, including slowing demand and rising input costs.
The contraction in core sector growth is a worrying sign for the Indian economy, as these sectors play a crucial role in driving industrial growth. The government will need to take steps to address the factors contributing to the slowdown, such as by boosting infrastructure investment and improving the business environment.
It is important to note that the eight core sectors contribute 40.27 percent to the Index of Industrial Production (IIP), which measures overall industrial growth. Therefore, the slowdown in core sector growth is likely to have a negative impact on overall industrial output in the coming months.