NEW CORE SECTOR, NEW BASE YEAR, AND MORE COMPONENTS
NEW CORE SECTOR, NEW BASE YEAR, AND MORE COMPONENTS For a long time, the core sector (infrastructure) growth reported each month by the DIPP had 8 manufacturing components. A few changes have been made to the core sector effective the…
NEW CORE SECTOR, NEW BASE YEAR, AND MORE COMPONENTS
For a long time, the core sector (infrastructure) growth reported each month by the DIPP had 8 manufacturing components. A few changes have been made to the core sector effective the June 2026 reading. For starters, the new Core Sector series has moved the base year to 2022-23 to make it more current. Instead of 8, there will be 9 core sectors, with Iron Ore output being the new addition to the core sector calculation.
More importantly, the weights have been rejigged to underplay the role of hydrocarbons. In terms of priority of weight size, the 9 sectors would be; Power (30.93%), Refinery Products (22.57%), Steel (17.58%), Crude Oil (7.43%), Coal (5.60%), Iron Ore (4.91%), Cement (4.41%), Natural Gas (3.84%), and Fertilizers (2.73%). Refining and Coal Mining have been underplayed, while Power has been overplayed in the new core sector mix.
MONTH-WISE CORE SECTOR GROWTH – LAST ONE YEAR
The table captures breakdown of the 5.00% yoy core sector growth for June 2026 across 9 infrastructure baskets. Previous data points have been revised, appropriately.
| Months | Overall | Coal | Crude | Natural Gas | Refinery | Fertilizers | Steel | Cement | Power | Iron Ore |
|---|---|---|---|---|---|---|---|---|---|---|
| Jun-25 | 1.06% | -6.85% | -2.95% | -0.51% | 3.32% | -1.21% | 10.20% | 7.88% | -1.25% | -16.41% |
| Jul-25 | 3.23% | -12.27% | -3.33% | -0.80% | -1.37% | 1.89% | 15.71% | 11.09% | 3.70% | -7.12% |
| Aug-25 | 6.16% | 10.81% | -2.15% | -0.71% | 3.42% | 4.55% | 15.27% | 5.38% | 4.19% | 7.94% |
| 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 | 5.00% | 1.41% | -7.36% | -4.24% | -4.73% | -3.31% | 4.63% | 9.77% | 9.85% | 43.93% |
Data Source: DPIIT (Department for Promotion of Industry and Internal Trade)
Like in the last few months, the pressure continues to come from the fossil fuels sector. Crude oil extraction, refinery products, and natural gas have all witnessed contraction in output in June 2026. Fertilizers also contracted, due to the supply chain constraints amid the war in the Gulf region.
Coal continues to be under pressure, but with reduced weightage, its impact on the core sector has been limited. The new addition of iron ore production has witnessed high growth rates in the last 4 months on the back of a low base. The positive traction in terms of impact has come from the steel, electricity, cement, and the iron ore segment.
ANNUAL CORE SECTOR NUMBERS: GETTING BETTER IN FY27
For the first quarter ended June 2026, the annualized core sector growth has come in better than expected at 3.6%.
| Fiscal Years | Overall (%) | Coal (%) | Crude (%) | Natural Gas (%) | Refinery (%) | Fertilizers (%) | Steel (%) | Cement (%) | Electricity (%) | Iron Ore (%) |
|---|---|---|---|---|---|---|---|---|---|---|
| FY25(Apr-Mar) | 4.3 | 5.0 | -0.3 | -2.2 | 2.8 | 2.9 | 7.3 | 6.4 | 5.2 | 4.6 |
| FY26(Apr-Mar) | 3.0 | -0.7 | -3.6 | -2.7 | 0.4 | -0.1 | 11.6 | 8.5 | 1.0 | 8.0 |
| FY26(Apr-Jun) | 1.0 | -0.2 | -2.7 | -1.8 | 0.0 | -3.8 | 9.4 | 7.3 | -1.5 | -5.1 |
| FY27(Apr-Jun) | 3.6 | -5.8 | -5.5 | -3.9 | -4.5 | -4.1 | 4.8 | 8.8 | 8.9 | 24.1 |
How does 3.6% FY27 first quarter core sector growth compare with the last 3 fiscal years? Compared to full year FY25, the core sector growth is lower, but there are still 9 months to make up, and we cannot underestimate the impact of a post-war recovery on output. That could lead to a surge in core sector this financial year.
How does the latest core sector number compare with FY26. The core sector growth for the first quarter of FY27 is better than the full year core sector growth of FY26 as well as the first quarter of FY26. Once again, the post-war recovery may be the positive surprise this year. However, for that, the war has to decisively end!
CORE SECTOR OUTPUT – WHAT IS THE BIG PICTURE?
Here are some key takeaways from the core sector data for June 2026.
Hydrocarbons are still putting pressure, but due to reduced weightage in the new series, their impact has been relatively muted.
The positive triggers are coming from the hard infrastructure linked baskets like iron ore, steel, and cement. That continues to be positive for the basket.
On a secular basis, core sector growth has fallen sharply over the last 10 years. That is a concern, as core sector is 40.27% of IIP and hence strongly impacts nominal GDP too.
The government has tapped the low-hanging fruit of infrastructure led growth. The tougher part is taking energy security from precept to practice. Only that will ensure sustained growth in core sector output at a much higher plane!
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