The eight core industries had expanded 1.2% in May 2025.
“The lower growth number on a low base can be attributed more to the decline in production from the petroleum-based sector,” Madan Sabnavis, chief economist at Bank of Baroda, said.
Five of the eight core sectors contracted in May. Coal output declined 9.3% compared with an 8.8% fall in April, while refinery products recorded the sharpest contraction in 42 months at 8.7%.
Rahul Agrawal, principal economist at ICRA, said the decline in refinery output partly reflected the fallout of the West Asia crisis.
Natural gas production fell 4.9%, crude oil output 4.6%, and fertiliser production 0.9%.
Sabnavis attributed the fall in petroleum-related output to higher crude imports and softer international prices. “In the case of natural gas, with supply chains being addressed, domestic production tended to fall. Lower exports of petroleum products also contributed to the decline in production,” he said.He added that coal production contracted as companies focused on managing inventory more efficiently and cut down on production.
In contrast, cement output rose to a three-month high of 8.4% in May from 8.2% in April, while steel output expanded 5% compared with 5.5%.
“Steel and cement continued to grow at a steady rate mainly due to higher infrastructure activity in the areas of roads and housing besides railways,” Sabnavis noted.
Electricity generation rose 8.7%, the fastest pace in 19 months, driven by higher household demand amid extreme heat conditions.
“The growth in electricity generation improved in May, aided by high temperatures as well as a favourable base; this ensured that overall core output growth remained in the positive territory in the month,” Agrawal said.
Sabnavis noted that renewable energy sources were the primary driver of higher electricity generation, while coal-based power played a secondary role.
The eight core industries account for 40.27% weight in the Index of Industrial Production (IIP). India’s industrial production grew 4.9% year-on-year in April, up from 3.2% in March.
Bank of Baroda estimates IIP growth at 1-1.5% for May, while ICRA projects 2-3%.