Core sector output fell 1.8% in August

Core sector output: India's core sector output contracted by 1.8 per cent in August, the sharpest fall since June 2022, to 6.1 per cent growth in July, as government data showed on Thursday. The average growth for the first five months of the fiscal year has slipped to 4.6 per cent against 8 per cent in the first five months of the last fiscal.

This decline would most probably have a huge impact on the total industrial output since it comprises the core sectors, namely cement, coal, crude oil, electricity, fertilizers, natural gas, refinery products, and steel.

The slowdown was further supported by the fact that the PMI of Manufacturing declined to a three-month low of 57.5 in August from 58.1 in July and reflects a weak demand situation. The core sector is essential for gauging the well-being of the manufacturing sector as it carries a 40% weightage in the Index of Industrial Production.

However, this leads analysts to believe that these trends indicate that the industrial landscape in India is only going to face more stress in the future, because declining output and weakening demand make its future growth prospects very questionable.