The overall output of eight core industries grew by 6.8% as compared to March 2021, its highest expansion in 32 months. The growth came on a small base of last year driven by a double-digit increase in cement, steel and electricity.   

In February, core sector output was down 3.8% year-on-year (YoY) declining at its fastest pace in the previous six months. Despite a return to growth in March, the cumulative output during the financial year 2021 contracted by 7%. 

However, the pace of growth in March was slower than that anticipated by economists. 

“Notwithstanding the base effect led-jump in the core sector growth to a 32-month high 6.8% in March 2021, the pace of expansion was weaker than our forecast of a 10% expansion, with a surprisingly sharp contraction in coal, and milder de-growth in fertilisers, crude oil and petroleum products,” said Aditi Nayar, Principal Economist at ICRA in a statement. 

According to data released by the Department for Promotion of Industry and Internal Trade (DPIIT), coal (-21.9%), crude oil (-3.1%), refinery products (-0.7%) and fertilisers (-5%) saw contraction while cement (32.5%), steel (21.6%), electricity (21.6%), and natural gas (12.3%) grew in March 2021.

For the entire FY21, cement (-11.9%), refinery products (-11.2%), steel (-9.5%), natural gas (-8.2%), crude oil (-5.2%), coal (-4.8%), electricity (-0.6%) contracted while fertilsers was the only sector which saw expansion of 1.8%.  

The industry department also revised the final growth rate of core sector for December 2020 to 0.4% from its provisional -1.3%. The 8 core industries comprise 40.27% of the weight in the Index of Industrial Production (IIP).