The output of eight key infrastructure sectors increased by 7.8 per cent in November 2023 against a 5.7 per cent expansion in the year-ago period, the government data showed on Friday. All sectors except crude oil and cement recorded healthy production growth in the month under review. The core sector (coal, crude oil, natural gas, refinery products, fertiliser, steel, cement, and electricity) growth in October was 12 per cent.

“Expectedly, there has been a moderation in core sector growth in Nov-23 to 7.8 per cent YoY as compared to the double-digit 12.0 per cent print in Oct-23. The differential in economic activity during these months can be attributed to the festival dates and the seasonality attached to them,” Suman Chowdhury, Chief Economist and Head of Research, Acuité Ratings & Research said. 

On a cumulative basis, the highest growth in the current fiscal continues to accrue from steel, coal, cement, and the electricity sector. Higher demand for electricity and lower imports of coal have translated into higher demand for domestic coal; with CIL taking steps to augment coal production, the supply has also increased.

According to Chowdhury, on a cumulative basis, the eight core industries (ECI) index has witnessed a strong 8.6 per cent year-on-year growth in the Apr-Nov’23 period which continues to reflect the high public investments in infrastructure. While the seasonality factor post-festive season has led to a sequential contraction in many of the segments, all of them except crude oil and cement output have seen a healthy annualized growth in the month of Nov-23.

Going ahead, the core sector growth in the next few months may moderate further due to a less favourable base. We estimate core sector growth for the full fiscal to be in the range of 6.0-6.5 per cent, which would still be the highest growth in the last ten years excluding FY22/23 just after the Covid pandemic.