Five of Eight Core Sectors Contract in June; Overall Growth Slows to 1.7%

New Delhi — India’s eight core infrastructure sectors clocked a modest 1.7% growth in June 2025—a three-month high but still well below last year’s 5% expansion—according to official data released by the Ministry of Commerce and Industry on July 21.

However, this headline growth masks concerning declines in half of the key sectors:

• Coal production dropped 6.8% year-on-year in June, dragged by a high comparison base from 2024.

• Crude oil output fell 1.2% year-on-year.

• Natural gas production declined 2.8%.

• Fertiliser manufacturing was down 1.2%.

• Electricity generation contracted by 2.8%.

These five underperforming sectors—critical enablers of industrial and agricultural activity—contributed to the moderate pace of combined growth, despite strong performance elsewhere.

Bright Spots: Steel, Cement, Refinery Products

The overall slowdown has been offset by robust gains in construction and refining:

• Steel production surged 9.3%, marking its strongest growth in seven months.

• Cement output rose 9.2%.

• Petroleum refinery products grew 3.4%.

Experts attribute these gains to sustained government capital expenditure, which is bolstering infrastructure activity.

Underlying Worries and Economic Implications

Analysts warn that the sharp contraction in fuel-linked sectors—coal, crude, gas, electricity—is troubling, especially ahead of the monsoon season:

“Excess rains in the latter half of June impacted electricity generation,” noted Aditi Nayar, Chief Economist at ICRA.

The declines suggest disruptions in upstream supply chains and a weak energy signal that could constrain broader industrial expansion.

Economists expect this mixed sectoral performance to weigh on industrial output: with core-sector growth at 1.7%, the overall Index of Industrial Production (IIP) may settle around a modest 1.5–2.5% for June.

Looking Ahead

As the Indian economy moves into Q2 FY26, sustaining momentum in energy and fuel sectors is crucial. While steel, cement, and refining continue to drive growth, India’s industrial growth trajectory will depend on timely recovery in coal, oil, gas, and power.

Government stimulus for transmission infrastructure, smoother monsoon-season operations, and targeted support for energy producers may be key to reviving these lagging sectors and maintaining overall industrial resilience.

The mixed June data underscores the Indian economy’s divergence: stellar at one end, struggling at the other. Finding balance will be the challenge—and opportunity—in the months ahead.