September 2026 Core Sector Growth Reaches 7.94%
INFRASTRUCTURE GROWTH GETS CLOSER TO 8% September 2026 saw the most robust core sector growth in the last one year at 7.94%. In fact, the average core sector growth in the previous 12 months was just about 3.92%; so, the September core...
INFRASTRUCTURE GROWTH GETS CLOSER TO 8%
September 2026 saw the most robust core sector growth in the last one year at 7.94%. In fact, the average core sector growth in the previous 12 months was just about 3.92%; so, the September core sector growth has virtually doubled from the average. To top it, the August core sector growth was revised up by 105 bps from 4.84% to 5.89%.
What triggered the surge in core sector growth in September 2026? Two heavyweight sectors did all the hard work. Electricity, with a weightage of 30.932% grew by 11.37% in September. Refinery products, with a weightage of 22.572% grew at a robust 10.3%, the best growth seen in the last 12 months. These 2 sectors really boosted core sector growth.
MONTH-WISE CORE SECTOR GROWTH – LAST ONE YEAR
The table captures breakdown of the 7.94% yoy core sector growth for September 2026 across 9 infrastructure baskets. Previous data points have been revised, appropriately.
| Months | Overall | Coal | Natural Gas | Crude | Refinery | Fertilizers | Steel | Cement | Power | Iron Ore |
|---|---|---|---|---|---|---|---|---|---|---|
| Sep-25 | 3.10% | -1.08% | -3.73% | -0.74% | -3.23% | 1.67% | 14.26% | 5.06% | 3.13% | 0.77% |
| Oct-25 | 0.82% | -8.44% | -5.20% | -0.82% | 5.32% | 7.40% | 9.48% | 5.20% | -6.95% | 8.74% |
| Nov-25 | 3.48% | 2.21% | -2.48% | -2.59% | -0.19% | 5.51% | 11.65% | 15.09% | -1.51% | 19.33% |
| Dec-25 | 5.63% | 3.72% | -4.36% | -5.11% | -0.26% | 4.12% | 11.08% | 13.96% | 6.24% | 22.29% |
| Jan-26 | 5.15% | 0.86% | -4.92% | -5.41% | 0.45% | 3.69% | 13.84% | 11.26% | 5.14% | 12.85% |
| Feb-26 | 3.21% | 1.36% | -4.96% | -4.83% | -0.39% | 3.51% | 9.87% | 9.12% | 2.29% | 8.54% |
| Mar-26 | 2.88% | -3.96% | -3.71% | -5.34% | 0.89% | -24.56% | 9.63% | 4.71% | 0.84% | 33.28% |
| Apr-26 | 2.67% | -9.02% | -4.20% | -3.21% | -0.20% | -8.54% | 4.68% | 8.28% | 5.49% | 12.47% |
| May-26 | 3.18% | -9.48% | -4.96% | -4.20% | -8.15% | -0.98% | 5.12% | 8.43% | 11.19% | 18.99% |
| Jun-26 | 5.97% | 1.41% | -4.81% | -4.24% | -3.97% | -3.31% | 5.56% | 9.93% | 11.36% | 44.51% |
| Jul-26 | 5.04% | 7.57% | -2.97% | -5.34% | 3.05% | -8.05% | 1.90% | 12.70% | 8.35% | 29.54% |
| Aug-26 | 5.89% | -3.75% | -4.88% | -3.56% | 5.58% | -12.36% | 3.46% | 11.68% | 13.15% | 5.49% |
| Sep-26 | 7.94% | 10.71% | -4.57% | -1.39% | 10.30% | -11.69% | 4.89% | 9.81% | 11.37% | 18.36% |
| Data Source: DPIIT (Department for Promotion of Industry and Internal Trade) |
Here are some key takeaways from the core sector data.
Some of the energy products continue to be under pressure. Crude oil output contracted by -1.39% while natural gas production contracted by -4.57%. However, coal output saw robust output in the month of September 2026.
If one looks at the growth in electricity demand in India, it has been at the highest level ever. With its thermal power predominance, the coal mines have been literally struggling to keep pace with the increasing needs of the thermal power plants.
The big surprise pack in the month was refinery products, which saw growth of 10.3% With the US going easy on Russian crude supplies and robust demand for Indian diesel, the Indian refiners are enjoying record exports of diesel and oil products to Europe, the US and Asia. Gross refining margins (GRMs) are also at relatively higher levels.
Fertilizer output continues to be under pressure due to the disruption of the petchem cycle. Middle East supplies have been under a lot of stress, of late, and Indian gas output is not sufficient to meet the demand of fertilizer companies.
While steel output has sobered to 4.89% from double digit growth, the cement output growth is closer to 10%. Both of them combined are hinting at strong demand from construction, housing, and infrastructure. Steel companies are facing shortage of key inputs like petcoke and ores.
While the energy sector continues to put pressure, the turnaround in the output of refinery products was a big positive surprise in the month of September 2026.
ANNUAL CORE SECTOR GROWTH: CROSSES 5% IN FY27
For the 6 months ended September 2026, the annualized core sector growth has crossed above 5% after a long time.
| Fiscal Years | Overall (%) | Coal (%) | Crude (%) | Natural Gas (%) | Refinery (%) | Fertilizers (%) | Steel (%) | Cement (%) | Electricity (%) | Iron Ore (%) |
|---|---|---|---|---|---|---|---|---|---|---|
| 2024-25(Apr-Mar) | 4.3 | 5.0 | -0.4 | -2.2 | 2.8 | 2.9 | 7.2 | 6.4 | 5.1 | 4.6 |
| 2025-26(Apr-Mar) | 3.0 | -0.8 | -3.5 | -2.6 | 0.4 | -0.1 | 11.6 | 8.5 | 1.1 | 8.0 |
| 2025-26(Apr-Sep) | 2.5 | -0.8 | -2.9 | -1.3 | -0.2 | -0.4 | 12.2 | 7.1 | 1.0 | -2.8 |
| 2026-27(Apr-Sep) | 5.1 | -1.0 | -4.4 | -3.7 | 1.0 | -7.6 | 4.3 | 10.1 | 10.2 | 21.2 |
The FY27 (6 months) core sector growth of 5.1% is meaningfully better than the first 6 months of FY26 at 2.5%. The positive traction in FY27 has largely come from electricity, iron ore, and the cement sector. Steel had grown in double-digits till March, but has since tapered on a higher base.
If the current trend continues till the end of FY27, India could see one of the best core sector stories in recent times. Core sector growth is critical because of its strong externalities and the multiplier effect it has on economic growth. Also, core sector accounts for over 40% of IIP and, therefore, is a key determinant of manufacturing GDP too.
CORE SECTOR SHOULD GIVE COMFORT TO THE RBI
The RBI has raised interest rates by 25 basis points in October and may raise by another 25 bps in December. There are always 2 considerations for the RBI. Firstly, the rate hike is necessary to curtail runaway consumer inflation and to manage inflation expectations. However, for that to work, the building blocks of GDP growth have to be robust, as the centre cannot forsake growth for price stability. The core sector data of September 2026, should give the government that much needed confidence. It, possibly, opens the gates for an almost certain rate hike of 25 bps in the December RBI monetary policy!
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