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India's Core Sector Output Contracts for the First Time in Four Years
Context
India's core sector output experienced a significant contraction of 1.8 percent in August 2024, marking the first decline in nearly four years. This follows a robust growth of 6.1 percent in July and a remarkable 13.4 percent expansion in August 2023. The slowdown is largely attributed to the high base effect from the previous year's performance.
Key-highlights:
- In August, steel output slowed to 4.5 percent against 10.9 percent in the same month last year.
- Natural gas production contracted by 3.6 percent during the month under review compared to an expansion of 10 percent in August 2023.
- India's coal production decreased by 8.1 percent in August, 2024 against an expansion of 17.9 percent in August 2023.
- Crude Oil production dipped by 3.4 per cent in August YoY in the month under review.
- India’s manufacturing PMI had slumped to a three-month low of 57.5 in August compared with 58.1 in the previous month, as demand had softened.
- The eight core sectors contribute 40.27 percent to the Index of Industrial Production (IIP) which measures overall industrial growth.
- Reason: The drop in output is primarily skewed due to last year's elevated growth figures. As a result, the average growth for the first five months of the year has now reduced to 4.6 percent, compared to 8 percent during the same period last year.
- Impact: This contraction will significantly impact industrial production, particularly as manufacturing activity has also seen a decline.
Fact Box: Core Sector
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