August core sector growth hits 3-month low as energy sectors lose steam

India's core sector output growth slowed to a three-month low of 4.8% in August, according to official data released on Monday. The decline was primarily due to a contraction in energy-related sectors, which saw a decrease in coal, crude oil, and natural gas production. The growth figure was lower than the 5% recorded in July and 6.2% in August 2025.

The revision of the index, which now uses 2022-23 as the base year instead of 2011-12, included iron ore, increasing the number of core industries to nine. Rahul Agrawal, principal economist at ICRA, noted that the moderation was partly due to an unfavorable base. Meanwhile, Madan Sabnavis, chief economist at Bank of Baroda, attributed the slowdown to weakness in key energy sectors and higher imports, particularly for fertilizers, which contracted for the sixth consecutive month in August.

Despite the challenges, some sectors performed well. Cement production grew by 12.5% year-on-year, slightly lower than the previous month's 12.7%. Electricity generation also saw strong growth, increasing by 11.6% in August compared to 8.4% in the previous month. Iron ore production rose 5.5% year-on-year, while steel output grew by 3.4%, and refinery products expanded by 2.6% due to both exports and domestic consumption.

Cumulative core sector growth from April to August reached 4.3%, up from 2.4% in the same period last year. The core sector contributes 40.27% to the Index of Industrial Production (IIP). According to ICRA, IIP growth is expected to ease to 5-6% in August, while Bank of Baroda projects 6-6.5%. The IIP growth rate was 6.7% in July.