Context:
- Growth in India’s eight core infrastructure sectors slowed to 1.8% in November, compared to 8.8% growth in November last year, indicating moderation in industrial momentum.
Key Highlights:
Core Infrastructure Sectors
- The eight core sectors include:
- Coal
- Crude oil
- Natural gas
- Refinery products
- Fertilisers
- Steel
- Cement
- Electricity
- Together, they account for 40.27% of the Index of Industrial Production (IIP).
Sector-wise Performance
- Positive Contributors:
- Coal
- Refinery products
- Electricity
- Weak / Contracting Sectors:
- Crude oil
- Natural gas
- Fertilisers
- Steel
- Output of core industries contracted by 0.7% in October, indicating continued volatility.
Economic Implications
- Core sector performance is a leading indicator of broader industrial activity.
- Slower growth suggests:
- Moderation in infrastructure demand
- Impact of base effects
- Sector-specific production constraints
Relevant Prelims Points:
- Issue & Causes
- Production constraints in hydrocarbons.
- Lower demand in some infrastructure-linked sectors.
- Base effect from high growth last year.
- Government Initiatives
- National Infrastructure Pipeline (NIP)
- PM Gati Shakti
- Focus on energy and logistics infrastructure.
- Benefits
- Continued growth, though modest, indicates resilience.
- Coal and electricity output support energy security.
- Challenges
- Decline in crude oil and natural gas production.
- Sluggish steel and fertiliser output.
- Impact
- Influences IIP growth.
- Signals need for sector-specific policy support.
Relevant Mains Points:
- Facts & Definitions
- Index of Eight Core Industries (ICI) measures combined performance of core sectors.
- Core industries’ weight in IIP: ~40%.
- Conceptual Linkages
- Infrastructure-led growth model.
- Relationship between core sector output and industrial expansion.
- Keywords
- Industrial slowdown
- Energy security
- Infrastructure investment
- Way Forward
- Address bottlenecks in oil and gas exploration.
- Boost domestic manufacturing of fertilisers and steel.
- Sustain public capital expenditure in infrastructure.
- Improve efficiency and capacity utilisation.
UPSC Relevance (GS-wise):
- GS III: Indian Economy – infrastructure, industrial growth, energy sector
- GS II: Government policies supporting infrastructure development