Core sector grows 3.6% in March ’23, crude import keeps refinery output up

New Delhi, April 28

India’s eight core industries (ICI) posted a growth of 3.6 per cent year-on-year (provisional) in March 2023, reflecting in the Index of Eight Core Industries (ICI) which increased on the back of higher production of coal, fertilizers, steel, natural gas and refinery products increased over the corresponding month of last year. The ICI measures combined and individual performance of production of eight core industries — coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity.

These eight core industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP). The final growth rate of ICI for December 2022 is revised to 8.3 per cent from its provisional level 7.4 per cent, the Commerce & Industry Ministry said on Friday. The cumulative growth rate of ICI during 2022-23 was reported at 7.6 per cent (provisional) as compared to the corresponding period of last year.

Among the core sectors in the ICI, petroleum refinery production grew by 1.5 per cent yoy even as crude oil production declined by 2.8 per cent yoy in March 2023. India’s petroleum refinery output is being boosted by cheap Russian crude imports which are at record high. Indian refiners imported 970,000-981,000 million barrels per day (bpd), of crude oil in FY23, as per Kepler and Vortexa data, resulting in large gains for Indian refineries in the last financial year.

A detailed look at the performance of the ICI sectors in March 2023 over the corresponding period of previous year, show coal production increased by 12.2 per cent yoy in March 2023, production of fertilizers increased by 9.7 per cent yoy, natural gas production increased by 2.8 per cent yoy and steel production increased by 8.8 per cent yoy in March 2023. Nomura Ratings finds that during March ‘23, India’s finished steel consumption came in at 10.99 million tonne (mnt), up 13.2 per cent yoy, while crude steel production was 11.19 mnt which was stable yoy. The finished steel imports came in at 0.43 mnt which was up 22.5 per cent yoy while finished steel exports were at 0.81 mnt, down 32.1 per cent yoy but up sequentially 41.2 per cent m-o-m). India was a net exporter of crude steel products after 5 months of being a net importer, as per Nomura research.

Among other Cement production declined by 0.8 per cent in March 2023 over March 2022 and electricity generation declined by 1.8 per cent yoy in March, 2023. The yoy core sector growth in March at 3.6 per cent, fell to a half of the 7.2 per cent growth recorded in February 2023. This was a five month low, and according to Aditi Nayar, Chief Economist at ICRA, was fairly broad-based, with only coal and crude oil displaying a sequential improvement.

“Output of some of the sectors is likely to have been dampened by the unseasonal rainfall, such as electricity and cement, which displayed a yoy contraction in March 2023 along with crude oil,” said Nayar. On the positive, coal, fertilisers and steel displayed a healthy expansion in excess of 8 per cent in March 2023, which is encouraging. Nayar expects the yoy growth in the IIP also to fall to 3-4 per cent in March 2023.