India’s core sector hits record 7.9% growth as temporary boosts cloud outlook

India’s core industries recorded their strongest growth in the current series in September, but heatwave-driven electricity demand and higher refinery activity raise questions over whether the surge can last.

India’s core industrial sectors expanded by 7.9% in September, the strongest reading in the current series and a sign that factory-linked activity has held up better than many economists had expected. According to data cited by industry trackers, the increase was driven by firmer output in coal, electricity, refinery products and iron ore, with the latest reading also helped by a favourable comparison base.

The gain matters because the core industries gauge is closely watched as an early indicator of industrial momentum and accounts for 40.27% of the Index of Industrial Production. The government’s revised sectoral framework now covers nine core industries rather than eight, after iron ore was added to the basket, making the September figure a broader measure of underlying activity than in earlier series.

Even so, the headline number may overstate the durability of the recovery. The Hindu, in an editorial on the data, said much of the strength appears to have been lifted by temporary factors, including higher electricity demand during a heat wave and stronger refining runs linked to imported crude. That leaves analysts asking whether the current pace can be sustained if those one-off supports fade.

There are also wider macroeconomic pressures. Rising global oil prices and the strain they place on India’s foreign exchange position could complicate the outlook, while public infrastructure spending continues to carry a large share of the growth burden. Fertiliser output remained weak in some of the other sectoral readings, underlining that the improvement is not yet uniform across the industrial base.