Backed by Increased Power Demand, Core Sector Output Grows 3.8% in March The eight core industries — coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity — make up 40.27 per cent of the Index of Industrial Production (IIP)

Electricity output expanded by 6.2 per cent in March 2025, up from 3.6 per cent in February, driving growth in the core infrastructure sectors. The rise was largely attributed to early summer onset and heat waves that pushed up power demand across the country.

This performance, along with a boost in steel and cement output, pushed the overall growth of the eight core sectors to 3.8 per cent in March 2025, up from 3.4 per cent in the previous month, according to provisional data released by the Ministry of Commerce and Industry. However, the growth this March was lower than the 6.3 per cent expansion seen in the same month last year.

The eight core industries — coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity — make up 40.27 per cent of the Index of Industrial Production (IIP).

"Electricity growth was at 6.2 per cent with higher demand due to the early onset of summer, characterized by the heat waves in several parts of the country. This came on top of 8.2 per cent growth in March 2024," said Madan Sabnavis, chief economist, Bank of Baroda.

In contrast, natural gas and crude oil output continued to underperform. Natural gas production fell sharply by 12.7 per cent — its ninth straight month of contraction — while crude oil declined 1.9 per cent after showing growth three months ago.

"Core sector growth was a mixed bag in March 2025, with oil-related products underperforming, while construction-related sectors continued on a growth trajectory," said Sabnavis.

"The oil complex was subdued due to lower production of crude and natural gas due to the low international price of crude. In the case of natural gas, higher imports substituted for domestic production. Refinery products growth was flat at 0.2% with lower prices and demand from exports affecting overall offtake," he said.

According to the provisional data, steel and cement output increased by 7.1 per cent and 11.6 per cent, respectively, from 6.9 per cent and 10.8 per cent last month.

"While most of the increase in production can be attributed to higher government spending towards the end of the year, the sharp rise in private sector investment announcements in Q4 also supports the growth in demand for steel," Sabnavis said.

"The year-on-year rise in the core sector inched up slightly to 3.8 per cent in March 2025, led primarily by the higher growth in electricity generation amid rising temperatures. In disaggregated terms, the sequential trend was quite mixed, with fertilisers, coal, natural gas, and refinery products reporting a moderation in their year-on-year growth in March 2025 relative to the previous month," said Aditi Nayar, chief economist, head - research & outreach, ICRA.

While ICRA expects the IIP growth to print at 3.0-3.5 per cent in March 2025, Bank of Baroda research puts it between 4–4.5 per cent.