NEW DELHI: The index of infrastructure industries grew 0.5 per cent in May, the slowest pace of expansion since last Oct, as only three of the eight sectors registered higher output. While cement expanded at 8.4 per cent, steel saw production rise by 5 per cent and power generation was 8.7 per cent higher, according to the latest numbers released on Monday.In contrast, the energy sectors — coal (down 9.3 per cent), refining (8.7 per cent fall), fertiliser (0.9 per cent dip), crude (4.6 per cent lower) and natural gas (4.9 per cent decline) — witnessed contraction. The index had increased 1.2 per cent in May 2025 and 1.8 per cent in April 2026. A part of the reason for the moderation was the disruption caused by the war in West Asia, which hit oil refining and fertiliser. Crude and gas production has fallen during most months, barring the occasional increase. “Coal registered negative growth as companies focussed on managing inventory in a more efficient manner and cut down on production,” said Madan Sabnavis, chief economist at Bank of Baroda.The eight core industries have a weight of over 40 per cent in the index of industrial production and their poor performance will be reflected in the factory output data due to be released later this month.“Core sector growth in May was disappointing… The lower growth number on low base can be attributed more to the decline in production from the petro-based sector,” Sabnavis said, adding that IIP was expected to expand 1-1.5 per cent in May.“Given the tepid performance of the core sector in May 2026, IIP growth is likely to weaken to 2-3 per cent in the month from 4.9 per cent in April 2026,” said Rahul Agrawal, principal economist at ratings agency ICRA.Several economists, as well as RBI, have lowered the growth forecasts for the current fiscal year due to the West Asia conflict as well as the likely impact of weak monsoons. But demand for automobiles, white goods and FMCG has so far held firm, reflecting in healthy tax collection numbers.
At 0.5%, core sector grows at slowest pace in 7 months
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