India's Core Sector Growth Dips to 2.9% in February: Key Insights and Implications

In February 2025, India’s core infrastructure sectors experienced a notable slowdown, registering a growth rate of 2.9%, marking the lowest monthly increase in five months. This is a significant dip from the 7.1% growth recorded in February 2024. The latest data released by the Union Commerce Ministry highlights a troubling trend, as only three out of eight core industries showed an uptick in production during the month.

Core Infrastructure Performance Overview

The core sectors play a vital role in India’s economy, accounting for over 40% of the country’s industrial output. In January, industrial growth had seen a resurgence, fueled by increased manufacturing and mining activities, with the Index of Industrial Production (IIP) rising to 5%—up from 3.2% the previous month. However, the February figures have raised concerns among economists.

February 2025 Growth: 2.9%
January 2025 Growth: 5.1%
February 2024 Growth: 7.1%

Key Industry Insights

According to Aditi Nayar, chief economist at Icra Ltd, the decline in core sector growth can be partly attributed to a high base effect from the leap year. She noted that five of the eight core sectors, including coal, crude oil, and natural gas, faced weaker performance compared to the previous month. With these developments, experts predict IIP growth may ease to approximately 3-3.5% in February 2025.

Highlights from Specific Sectors

Despite the overall slowdown, certain sectors showed resilience:

Cement and Fertilizers: Both sectors provided a boost to the core output with growth rates of 10.5% and 10.2%, respectively. However, cement production did see a decline month-on-month.
Coal: Experienced a modest growth of 1.7%, the slowest in six months.
Refinery Output: Increased by 0.8%, also the slowest pace in half a year.
Crude Oil: Saw a contraction of 5.2%, while natural gas output fell by 6%.

Decline in Manufacturing Sector

The manufacturing sector faced challenges in February, with the HSBC India Manufacturing Purchasing Managers’ Index (PMI) dropping to 56.3 from 57.7 in January. This decline reflects a significant reduction in sales and output growth, reaching a 14-month low. A PMI score above 50 indicates expansion, but the current figures suggest a cooling in manufacturing activity.

Conclusion

The February performance of India’s core infrastructure sectors raises important questions about the sustainability of economic growth. With manufacturing slowing down and several key industries struggling, stakeholders will be closely monitoring upcoming data to gauge the health of the economy moving forward. For more insights on India’s economic landscape, check out our articles on manufacturing and industrial growth trends.