Production of eight branches of infrastructure, which are included in the composition the main sector rebounded to 7.9 percent growth in September—a three-month high—on the back of a favorable base and double-digit growth in fertilizer, cement and power output.
Data published by the industry department showed that compared to the previous month, growth in the production of coal (12 percent), steel (6.7 percent), electricity (11 percent) and cement (12.1 percent) accelerated. However, the growth of production of oil refining products (6.6 percent) and fertilizers (11.8 percent) slowed down. Crude oil (-2.3 percent) and natural gas (-1.7 percent) production decreased for the fourth and third consecutive months, respectively.
Cumulative growth of the main sector in the first half of FY23 (April-September) was recorded at 9.6 percent, significantly lower than the 16.9 percent recorded in the same period last year.
Commerce Minister Piyush Goyal expressed his appreciation for the growth in key sectors in a message on Twitter. “The reason India is called a global bright spot is because of the strength of its core industries (as eight core industries registered 10 percent growth in April-September 2022 compared to the corresponding period last year),” Goyal tweeted.
Madan Sabnavis, chief economist, Bank of Baroda, said the recovery in September was the result of higher capital investment by the Center as both steel and cement registered strong growth, while demand for the upcoming rape season boosted fertilizer production.
“Excluding the oil and gas industry, growth was impressive in the remaining six sectors. Based on the growth of 7.9 percent in September, we can expect growth in the region of 4-5 percent in the (upcoming) index of industrial production (IIP),” he added.
Aditi Nayar, Chief Economist, ICRA, shared a similar positive sentiment about the future IIP. “Z the main sector growth increased to 7.9 percent in September and surged GST electronic waybills ahead of the festive season, we expect IIP to return to modest growth of 4-6 percent this month, compared to the unexpected contraction in August,” she said.
The International Monetary Fund (IMF) in its latest World Economic Outlook has cut India’s FY23 gross domestic product (GDP) growth forecast by 60 basis points (bp) to 6.8 percent, warning of a long and difficult economic in the winter
“India is forecast to grow at 6.8 percent in 2022, down 0.6 percentage point from the July forecast, reflecting weaker-than-expected second-quarter results (April-June) and lower external demand,” the report says. The IMF said last month.
The Reserve Bank of India last month also revised its growth forecast for FY23 to 7 percent from 7.2 percent previously calculated.
“Headwinds from continued geopolitical tensions, tightening global financial conditions and a possible decline in the external component of aggregate demand could create downside risks to growth,” RBI Governor Shaktikanta Das said in his latest monetary policy statement last month.