Core infrastructure sector growth slows to 7 month low of 0.5% in May

Growth in India’s core infrastructure sector slowed sharply to a seven-month low of 0.5% in May, weighed down by a steep contraction in energy-related segments, according to official data released on Monday.According to agency reports,the output of the eight core industries, measured by the Index of Eight Core Industries (ICI), had expanded 1.8% in April, while the growth rate stood at 1.2% in May 2025. The May 2026 performance was the weakest since October 2025, when the sector had recorded a contraction of 0.1%. It was also the second-lowest growth reading in 21 months.Five out of the eight core sectors registered a decline in production during May compared with the same period last year, highlighting the pressure on industrial activity.
Coal output witnessed the sharpest decline, contracting 9.3% year-on-year during the month. Refinery products, which carry the highest weight in the core sector index, recorded an 8.7% contraction, marking the steepest fall in nearly 42 months. The decline was partly attributed to disruptions linked to the West Asia crisis.Crude oil production also fell 4.6% year-on-year, while natural gas output declined 4.9%, according to data released by the Ministry of Commerce and Industry.Fertiliser production slipped 0.9% in May compared with the previous year. However, the sector showed some improvement compared with the previous two months. Cumulatively, fertiliser output during April-May 2026 was down 4.5% from the corresponding period last year.
Meanwhile, construction-linked sectors provided some support to overall core sector growth. Electricity generation emerged as the strongest performer, rising 8.7% during May, reflecting robust power demand amid higher temperatures. Cement output increased 8.4%, while steel production grew 5%, indicating continued momentum in infrastructure and construction activity.According to a research note, electricity generation recovered strongly during April and May 2026, helping keep overall core sector output in positive territory. The improvement in power generation was supported by increased demand and a favourable base effect.Experts said the weak performance of the core sector in May could impact broader industrial output growth. They noted that Industrial Production (IIP) growth may moderate to around 2-3% in May from 4.9% recorded in April, due to subdued performance across key infrastructure segments.However, resilience in electricity, cement and steel output suggests that infrastructure-related activities continue to provide support to the economy amid weakness in energy-intensive sectors.

(Business Correspondent)