India's core output growth stays flat in October

New Delhi: India's core sector output growth remained flat in October on a year-on-year basis and fell to a 14-month low, weighed down by contractions in mining and electricity, official data released Thursday showed. Growth stood at 3.3% in September and 3.8% in October 2024.

"Core sector performance was disappointing as the energy sector including power and coal were in negative territory," said Madan Sabnavis, chief economist at Bank of Baroda.

Aditi Nayar, chief economist at ICRA, said, "Excess rainfall impacted mining activity and power demand in October."

Coal output recorded the sharpest decline of 8.5% year-on-year in October. Electricity generation contracted 7.6% in October compared with 3.1% growth in September.


"Thermal production is down reflecting the late withdrawal of the monsoon," said Sabnavis.

Natural gas production dropped 5%, while crude oil output declined by 1.2%. The remaining four sectors posted positive growth in October. Refinery products rose 4.6%, rebounding from a 3.7% contraction in September. Fertiliser and cement output increased 7.4% and 5.3%, respectively.

"The government capex push is reflected in steel in particular, and partly in cement. This has compensated for negative growth in the energy segment," Sabnavis noted.

Steel sector growth fell to a six-month low of 6.7% in October from a double-digit growth of 14.4% in September.

Nayar attributed part of this slowdown to an adverse base, with an early onset of the festive season in 2025. For the first seven months of FY26, average core sector growth was 2.5%, lower than 4.3% recorded in the corresponding period last year.

The eight core industries account for 40.27% weight in the Index of Industrial Production (IIP).

Industrial output eased slightly to 4% in September from 4.1% in August.

Bank of Baroda pegs IIP growth at 1.5-2%, assuming consumer goods maintain momentum.

ICRA expects IIP growth to ease to 2.5-3.5% in October compared, "even as the growth in manufacturing is likely to remain healthy aided by higher demand during the festive season on account of the goods and service tax (GST) rate rationalisation and the ensuing restocking", said Nayar.

Official IIP data for October will be released on November 28.