Analysing India’s Core Sector Slowdown

  • The growth rate in India’s eight major industries slowed significantly in November, falling to 7.8% from 12% in October.

About India’s Core Industries

  • The core sectors of an economy are the main or key industries.
  • In India, the key sectors are regarded to be eight.
  • These sectors are listed in decreasing order of weightage: Refinery Products> Electricity> Steel> Coal> Crude Oil> Natural Gas> Cement> Fertilisers.

Concerning the Index of Eight Core Industries

  • The monthly Index of Eight Core Industries (ICI) is a volume index of production.
  • ICI assesses collective and individual production performance in eight core industries: coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity.
  • Prior to the 2004-05 series, the index basket consisted of six main industries: coal, cement, finished steel, electricity, crude petroleum, and refinery products.
  • In the 2004-05 series, two new industries, fertiliser and natural gas, were introduced to the index basket. The ICI series will continue to include eight core industries in 2011-12.

The following components are covered in these eight industries for index compilation:

  1. Coal – Production of coal other than coking coal.
  2. Crude Oil is the total amount of crude oil produced.
  3. Natural Gas Production – Total Natural Gas Production.
  4. Total Refinery Production (in terms of Crude Throughput) – Refinery Products.
  5. Urea, Ammonium Sulphate (A/S), Calcium Ammonium Nitrate (CAN), Ammonium Chloride (A/C), Diammonium Phosphate (DAP), Complex Grade Fertiliser, and Single Superphosphate (SSP) are examples of fertilisers.
  6. Steel – Only alloy and non-alloy steel are produced.
  7. Cement – Production of large and small plants.
  8. Electricity – Actual generation of thermal, nuclear, and hydroelectric power, as well as imports from Bhutan.

Recent information: Details on Sector Growth

  • ICI decline: The ICI fell 3.34% from October to its lowest level since March 2023.
  • Trends in Specific Industries: Notably, only refinery products and coal increased month over month, with large year over year increases.
  • Steel Production: Steel production increased at a 13-month low of 9.1%.
  • Crude Oil and Fertiliser: Crude oil production fell, but fertiliser production increased slowly.
  • Natural Gas and Electricity: Growth in both natural gas output and electricity generation slowed significantly in November.

Comparison with the Previous Year

  • Comparison of Years: In November 2022, the core sectors grew by 5.7%.
  • Base Effects’ Influence: Last year’s rapid rise in particular industries, like as cement, had a big impact on this year’s comparison numbers.

Economic Insights and Forecasts

  • According to the Bank of Baroda’s chief economist, the halt in fertiliser increase corresponds with the conclusion of the rabi sowing season.
  • IIP Forecast: The main sectors are predicted to contribute to a 7%-8% increase in IIP.
  • Experts estimate that core sector growth would continue to decelerate due to substantial base effects from the previous fiscal year.

Future Prospects and Challenges

  • India Predictions based on ratings and research: The high base impact is expected to cause a slowdown in core sector growth in the following months.
  • Broader Economic Impact: This slowdown is a harbinger of wider economic issues, which could have an impact on future policy and market expectations.


  • Economic Resilience Test: Trends across India’s major industries highlight the challenges of sustaining growth in the face of varying economic situations.
  • Strategic Economic Planning is Required: To address these slowdowns, savvy economic planning and maybe new tactics to increase growth in these critical sectors would be required.
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