Core sector output growth slumps to 20-month low of 0.1% in Oct

India's eight core industries recorded a growth of 0.1% in October 2022 compared with 8.7% in the same month last year, data released by the Ministry of Commerce & Industry shows.

The combined index of eight core sectors slowed to a 20-month low, dragged down by contraction in the output of crude oil, natural gas, refinery products, and cement.

The index of core industries measures combined and individual performance of production in selected eight core industries such as coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity.

While crude Oil production declined 2.2% year-on-year in October, petroleum refinery production fell by 3.1%. Natural Gas production dropped 4.2% last month.

Cement production fell 4.3% year-on-year in October 2022. Its cumulative index increased by 8.6% during April to October, 2022-23 over the corresponding period of previous year.

The growth rate during April-October this fiscal was 8.2% as against 15.6% a year ago.

The eight core industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP). The IIP data for October is expected to be released by the government in the second week of December.

Meanwhile, India's economy grew at 6.3% in the quarter ended September. "Real GDP or GDP at Constant (2011-12) Prices in Q2 2022-23 is estimated at ₹38.17 lakh crore, as against ₹35.89 lakh crore in Q2 2021-22, showing a growth of 6.3 percent as compared to 8.4 percent in Q2 2021-22," says the Ministry of Statistics & Programme Implementation.

The nominal GDP growth (GDP at current prices) in the quarter was ₹65.31 lakh crore against ₹56.20 lakh crore in Q2 FY22, a growth of 16.2% vs 19% in the year-ago period.

India's GDP at constant prices in the April-September or H1 FY23 period stood at ₹75.02 lakh crore, as compared to ₹68.36 lakh crore in the same period last year, showing a growth of 9.7% in H1 FY23 as against 13.7% during the same period last year.

Foreign brokerage Goldman Sachs expects India's economy to grow at 5.9% in calendar year 2023, dragged down by slowing consumer demand due to high interest rates.

Gross domestic product may expand by 5.9% next year from an estimated 6.9% in 2022, Goldman Sachs economists wrote in a report. "Growth will likely be a tale of two halves, with a slower first half as the reopening boost fades, and monetary tightening weighs on domestic demand. In the second half, growth is likely to re-accelerate as global growth recovers, drag from net exports diminishes, and investment cycle picks up," they said.

India's Consumer Price Index (CPI) based retail inflation fell to a three-month low of 6.77% in October, down from 7.41% in September 2022. Retail inflation, however, remained above the Reserve Bank of India's (RBI) upper tolerance band of 6% for the 10th consecutive month.