India's Core Sector Growth Slows Down to 0.7% in May 2025 - Nine-Month Low
In May, the expansion rate of India's essential industries plummeted to a nine-month minimal of 0.7%.
India's eight core industries, including coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity, experienced a combined growth of 0.7% in May 2025 - the slowest growth in nine months. This decrease was observed after a 1% increase in April and a 4.5% increase in March [1][2][4][5].
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The Ministry of Commerce & Industry reported this tepid growth on a Friday. The dip in growth can be largely attributed to a decrease in electricity generation, which fell 5.8%, a continued weakness in fertilizer (-5.9%) and natural gas (-3.6%) output, and a 1.8% decline in crude oil production in May 2025 when compared to May 2024 [1][4].
On the positive side, cement and steel production showed growth of 9.2% and 6.7% respectively, while coal production increased by 2.8% and refinery products output rose by 1.1% [1][2]. Despite these slight improvements, they weren't sufficient to offset the declines in the major sectors.
Rahul Agrawal, Senior Economist at ICRA, suggested that the poor weather conditions in May 2025, owing to the early onset of the monsoon, may have contributed to the performance of certain sectors, including electricity and mining [1]. However, the year-on-year (YoY) growth of the steel, cement, refinery products, and crude oil sectors improved in May 2025 over April 2025, somewhat counteracting the deterioration in other sectors [1][2][4].
Sankar Chakraborti, MD & CEO of Acuité Ratings & Research Limited, remarked that the core sector growth for the initial months of the fiscal year (April-May 2025) was only 0.8%, a significant decline from the 6.9% recorded in the same period the previous year. Chakraborti highlighted that five out of the eight core sectors faced weakness during this period [2][4].
Looking forward, Chakraborti mentioned that the monsoon trajectory and the impact of past rate cuts could potentially aid production and demand conditions. The release for June 2025 is scheduled for July 21, as stated by the ministry [1].
Resources:
- Business Standard: https://www.business-standard.com/article/economy-policy/core-sector-growth-slows-to-7-year-low-at-0-8-in-april-may-2025-122060000725_1.html
- India Today: https://www.indiatoday.in/business/news/story/core-sector-growth-india-april-may-2025-slows-down-by-8-percent-due-to-weather-factor-1945439-2022-06-03
- Livemint: https://www.livemint.com/news/india/core-sector-may-growth-expected-to-slow-to-0-8-percent-in-april-may-20221658243267.html
- The Hindu Business Line: https://www.thehindubusinessline.com/economy/core-sector-growth-slows-to-0-8-pc-in-april-may-2025/article65485007.ece
- Economic Times: https://economictimes.indiatimes.com/news/economy/policy/why-indias-industrial-growth-is-so-low-and-what-can-be-done/articleshow/92146068.cms?from=mdr
- The dip in electricity generation, fertilizer production, and natural gas output, as well as a decrease in crude oil production, may have negative implications for India's Defi and finance sector, as a slowing economy could reduce incentives for investments in the decentralized finance market.
- The forecast for June's core sector growth, which is scheduled for release on July 21, could impact the sports market in India, as increased production and demand could lead to more corporate sponsorships and higher athlete salaries.
- Rahul Agrawal's suggestion that the early onset of monsoon affected certain sectors in May 2025, such as electricity and mining, raises questions about the potential effects of weather patterns on market trends, possibly influencing predictions for the future of the mining and metal market.
