Infrastructure output rises 5.4 per cent in November

India's core sector growth rebounded to 5.4% in November from the 20-month low of 0.9% in October, benefiting from a strong recovery in coal, fertiliser, steel, cement, and electricity sectors.

The higher growth is expected to nudge the overall industrial output growth into an expansion zone in November after the unexpected 4% contraction in October.

"With fewer holidays relative to November 2021, the growth of the core sector output expectedly improved to 5.4% in November 2022 from the marginal 0.9% in October 2022, as the base effect reversed," said Aditi Nayar, chief economist, ICRA.


The industrial sector is challenged by a sharp export slowdown amid a deepening global downturn and local headwinds from rising interest rates and high inflation.

Capex Support
In April-November, the core sector grew 8% from a year earlier.

The core sector index tracks output across these eight infrastructure industries that have a 40.3% weight in the Index of Industrial Production (IIP).

India Ratings said it expects IIP growth to recover to low-single digits in November.

"The steel and cement sectors are expected to register good yoy growth in the near term on the back of sustained capex support from both the state and the union government," the rating agency said.

It expects the core sector output to rise about 5% in December.

Coal (12.3%), fertiliser (6.4%), steel (10.8 %), cement (28.6%), and electricity (12.1%) posted strong growth in November from a year earlier. Refinery products output contracted 9.3% on-year to a 21-month low while the output of crude oil and natural gas shrank 1.1% and 0.7%, respectively.

"Each of these three sectors have witnessed a reduction in output now for two, six and five months, respectively, alluding to the fragility of the ongoing recovery," said Devendra Pant, chief economist, India Ratings and Research.

India's economy grew 6.3% in the July-September period from a year earlier. The Reserve Bank of India expects growth to further slow to 4.4% in the October-December quarter and 4.2% in the January-March quarter.

The core sector growth was revised up for October to 0.9% from 0.1% estimated earlier while that for August got a lift to 4.2% from its provisional 3.3%.