Eight Core Industries of India

Eight core industries growth stagnates at 4.7% YoY in October 2017 due to a downward pull from cement and crude oil production.

Published monthly by the Ministry of Commerce and Industry. Updated till October 2017(Published on November 30th, 2017).

Recent Data Trend

The eight core industries (Refinery Products, Electricity, Steel, Coal, Crude Oil, Natural Gas, Cement, and Fertilizers) output grew at 4.7% YoY in October, unchanged from the output growth in the previous month. The 4.7% YoY growth is the highest in the current fiscal year (April 2017-March 2018), but far lower than the 7.1% YoY output growth clocked in October 2016. On a cumulative basis, during April-October 2017, 8-core industries output stagnated to 3.45% YoY from a 5.6% YoY growth in the corresponding period a year ago. The 8 core industries have about 40% weightage in the total industrial production of India.

The lower growth in eight core output in October 2017 compared to a year ago period was due to the subdued growth in the cement (contraction of 2.7% YoY), steel (8.4% YoY) and refinery production (7.5% YoY). Electricity production decelerated for the fourth straight month falling to 2.1% YoY in October 2017, lower than the 3% YoY growth recorded in the corresponding period a year ago. The reduction in electricity output growth led to an increase in the power deficit (Availability of power-Requirement of Power/Availability of Power)to 0.9% in October 2017, higher than 0.5% in October 2016.

It is important to note that while, in absolute terms, the steel production reached an all-time high (9.2 million tonnes) in October 2017, however, the growth of steel production fell to 8.4% YoY in October 2017 from more than the double-digit growth of 17.4% YoY in October 2016.The coal production, on the other hand, grew at a pace of 3.9% YoY in October 2017, in contrast to the contraction of 1.9% YoY in October 2016. Further, the fertilizer production grew by 3% YoY, ending the contraction in production in the past two months.

The natural gas output grew by 2.8% YoY in October 2017. The production was in contrast to the contraction to the tune of 1.5% YoY in October 2016. The growth in natural gas production is attributed to the healthy performance of acreages under government-owned Oil and Natural Gas Corporation (ONGC) which saw its output rise by 3.86% YoY in October 2017. Crude oil output growth also showed some improvement compared to the last year, contracting by 0.4% YoY in October 2017 as compared to the 3.2% YoY fall in the corresponding period, a year ago. The marginal dip of 0.4% YoY was due to the poor performance of fields under Production Sharing Contracts (PSC).

As eight core industries constitute a large portion of industrial production (IP), the October figure for IP would probably yield a very mild expansion. The July-September 2017 quarter data of GVA revealed that industry sector grew by 5.78% YoY, a marginal contraction from 5.89% YoY growth in the same quarter in the previous year. The modest expansion of the industrial sector in the past quarter is a welcome news for the economy, however, sustainability of the expansion remains a doubt. Government's increased spending in the form of the bank recapitalization can help revive stressed power plants which have been stalled due to high project costs and lack of power purchase agreements (PPAs). The new addition to the IBC (Insolvency and Bankruptcy Code) will also ensure that the genuinely distressed companies are the ones to be bailed out from bankruptcy and these steps might finally provide the much-needed boost to the industry sector.

Brief overview of 8 core industries of India

The data on production of 8 core industries of India is published monthly by the Ministry of Commerce and Industry. The current base year for the index of the series is 2011-12=100. The 8 core industries included are- Coal, Crude oil, Natural Gas, Petroleum refinery products, Fertilizer, Cement, Steel, and Electricity generation. These 8 industries comprise 40.27% of the weight of the items included in the Index of Industrial Production. For more information please visit the official government website.

Next Release Date: January 1st, 2018

Production of eight core industries-Quarterly

8 Core Industries of India(2004-05=100)

Note: The data in the above graph is of the base year 2004-05=100 and has been discontinued since March 2017.