Core infrastructure output expands just 0.5 pc in May, lowest in 7 months

Growth in the output of India's eight core infrastructure sectors slowed to a seven-month low of 0.5 per cent in May, weighed down by a decline in the production of coal, crude oil, natural gas, refinery products and fertilisers.

The growth rate stood at 1.8 per cent in April 2026 and 1.2 per cent in May 2025, according to government data released on Monday.

Among the eight core industries, coal, crude oil, natural gas, refinery products and fertiliser output registered negative growth during May.

Growth in steel production dipped to 5 per cent from 7.4 per cent a year earlier, while cement output growth moderated to 8.4 per cent from 9.7 per cent in May 2025.

Electricity generation emerged as the only major bright spot, growing 8.7 per cent during the month compared with a contraction of 4.7 per cent in the corresponding period last year.

During April-May 2026-27, cumulative growth in the eight core sectors stood at 1.1 per cent.

The previous lowest growth rate was recorded in October 2025, when core sector output contracted by 0.1 per cent.

Commenting on the data, Rahul Agrawal, Principal Economist at ICRA Ltd, said five sectors reported a contraction in output during May, including refinery products, which recorded the steepest decline in 42 months.

He said the fall partly reflected the impact of the West Asia crisis on the sector.

Agrawal noted that electricity generation rose to a 19-month high of 8.7 per cent, supported by high temperatures and a favourable base effect, helping keep overall core sector growth in positive territory.

“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,” he said.

The eight core sectors comprise coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity, and together account for 40.27 per cent of the weight of the Index of Industrial Production (IIP).