India's core sector growth slowed significantly in May 2025, registering a meager 0.7% increase compared to 6.9% in the same month last year. This marks the lowest growth rate in nine months, with the last instance of a lower pace recorded in August 2024, when output contracted by 1.5%. The eight core industries, which comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP), include coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity.

The latest data, released by the government on Friday, June 20, 2025, reveals a mixed performance across these key infrastructure sectors. While some sectors demonstrated positive growth, others experienced a decline, contributing to the overall slowdown.

Specifically, cement, steel, coal, and refinery products showed positive growth during May. However, this was offset by contractions in crude oil, natural gas, and fertilizer production. Furthermore, electricity generation also witnessed a fall, adding to the downward pressure on the core sector's overall performance.

The subdued growth in May follows a trend of fluctuating performance in the preceding months. The final growth rates for February, March, and April 2025 were revised to 3.4%, 4.5%, and 1.0%, respectively, indicating a lack of sustained momentum in the core industries. In April 2025, the Index of Eight Core Industries (ICI) recorded a modest growth of 0.5 percent compared to the same month last year

A closer look at individual sector performance reveals further details. In April 2025, cement production emerged as the strongest performer with a robust growth of 6.7 percent compared to April 2024. Coal and Steel sectors also showed steady growth at 3.5 percent and 3.0 percent respectively, while Electricity generation recorded a marginal increase of 1.0 percent, and Natural Gas production grew slightly by 0.4 percent. However, Petroleum Refinery Products witnessed the steepest drop at 4.5 percent, followed by Fertilisers at 4.2 percent and Crude Oil at 2.8 percent.

The slowdown in core sector growth has implications for India's broader industrial output and economic growth. The core industries play a crucial role in driving economic activity, and their performance is closely watched as an indicator of overall industrial health. The weak growth in May could potentially dampen industrial production and overall GDP growth in the coming months.

Several factors may have contributed to the slowdown in May. These could include seasonal effects, fluctuations in global demand, domestic policy changes, and infrastructure bottlenecks. It is important to analyze these factors in detail to understand the underlying causes of the slowdown and to formulate appropriate policy responses.

The government is likely to take note of the latest core sector data and consider measures to boost growth in these key industries. This could include steps to address infrastructure constraints, promote investment, and stimulate demand. Going forward, it will be crucial to monitor the performance of the core sectors closely and to take timely action to ensure sustained and inclusive industrial growth.