Core sector growth accelerates to 7.9% in September, fastest in new series

Cumulative growth during April-September 2026 stood at 5.1%, more than double the 2.5% expansion recorded in the corresponding period of the previous year. Iron ore output grew 18.4% in September, followed by electricity at 11.4%, coal at 10.7%, refinery products at 10.3%, cement at 9.8% and steel at 4.9%. Fertilizers, natural gas and crude oil registered contractions of 11.7%, 4.6% and 1.4%, respectively.

The index for August was revised upwards to 120.4 from the provisional estimate of 119.2. Consequently, its year-on-year growth rate was revised to 5.9% from 4.8%. The overall index stood at 118.3 in September, compared with 109.6 a year ago. “The uptick was broad-based, with seven of the nine sectors, barring electricity and cement, recording an improvement in their performance in September 2026 vis-à-vis August,” said Aditi Nayar, chief economist at Icra Ltd.

Nayar attributed the improvement partly to a favourable base. “Coal and iron ore output witnessed a meaningful pickup in their on-year growth rates in September 2026 compared to August 2026; while this was aided by a low base, the sequential uptick in coal was quite strong, amid low stocks at power plants,” she said. Refinery products output expanded by a series-high 10.3% in September, compared with 5.6% in August, supporting overall core sector growth, Nayar said.

Electricity generation growth eased to 11.4% in September from 13.1% in August, although it remained strong. Nayar said the monsoon deficit supported demand during the month. Icra now forecasts full-year electricity growth at 8.5%, exceeding its baseline forecast of 7.1% for gross domestic product growth in the current fiscal year. Cement output expanded 9.8% in September, while steel output growth was relatively muted at 4.9%.

However, trends in finished steel consumption suggest that construction activity likely remained healthy during the month, Nayar said. Despite the acceleration in core sector output, Icra expects growth in the Index of Industrial Production (IIP) to moderate to 6-7% in September from 8% in August, with an elevated base weighing on the non-core segment, she said. The eight core industries comprise coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity.

Together, they account for 40.27% of the weight of items included in the IIP. The ministry said coal, refinery products, steel and iron ore had been the major drivers of overall core sector growth in recent months.