Core sector output growth spurts to 6.7% in Feb.

Doubledigit upticks in the natural gas, cement, coal industries lead to threemonth high levels Fertilizers saw a fall of 9.5%; this is the second month in a row that output has taken a tumble

As both Union and State governments rush to meet targets, infrastructure will stay at 6% in March too

India’s eight core sectors’ output growth spurted to a threemonth high of 6.7% in February, led by doubledigit upticks in coal, natural gas and cement even as fertilizers’ production fell 9.5% to record the sharpest contraction since May 2021.

January’s Index of Core Industries (ICI) was revised to reflect a 4.1% rise, compared with the previous estimate of 3.6%, but that remained the slowest growth in 15 months. This is the second month in a row that fertilizers’ output dipped yearonyear, and marks the first such streak in two years. In absolute terms, overall output levels were at a threemonth low and 4.9% below January’s levels, which had marked a tenmonth high. In sequential terms, the only segment to record an uptick over January’s production level was cement (up 1.74%).

Crude oil production

In yearonyear terms, crude oil production grew at an alltime high pace of 7.9% in February, although that was aided by base effects as output had dropped 4.9% in the same month last year.

Natural gas output grew 11.3%, which was the highest in two years. The upticks in February also marked a fourmonth peak for cement (10.2%), electricity (6.3%), and coal (11.6%).

While steel production growth eased slightly to 8.4% in February, refinery products recovered from a 4.3% contraction in January to rise 2.6%.

As the ICI has a weightage of slightly over 40% in the Index of Industrial Production (IIP), economists expect industrial output growth to recover from the 3.8% uptick recorded in January.

ICRA chief economist Aditi Nayar reckoned the IIP would record an expansion of 6%6.5% in the month of February, while Bank of Baroda’s chief economist Madan Sabnavis pegged it in the range of 4% to 5%.

“The 6.7% uptick in February reversed the declining trend seen in December and January and cumulative growth so far in 202324 has been smart at 7.7%, coming over the 6.8% growth last year,” Mr. Sabnavis said.

CareEdge Ratings’ chief economist Rajani Sinha said IIP growth may pick up to around 5.5% in February, while India Ratings and Research projected it to rise 5%.

As both the Union and State governments rushed to meet their capex targets in March, the core infrastructure sectors’ growth is expected to stay around 6% this month as well, said India Ratings’ economists Sunil Kumar Sinha and Paras Jasrai.