Core sector growth slows to seven-month low of 0.5% in May as coal, oil output contracts

India’s eight core infrastructure sectors recorded a sharp slowdown in production growth to a seven-month low of 0.5% in May 2026, weighed down by declining output in coal, crude oil, refinery products, natural gas and fertilisers. 

The growth rate had stood at 1.8% in April 2026 and 1.2% in May 2025, according to government data released on Monday. For the first two months of FY27 (April–May 2026-27), cumulative growth in the core sectors remained subdued at 1.1%. 

The latest reading marks the weakest expansion since October 2025, when the Index of Eight Core Industries had contracted by 0.1%. 

The slowdown was primarily driven by broad-based weakness across energy-linked sectors, although gains in steel, cement and electricity helped prevent an overall contraction. 

Energy sectors drag growth 

Coal production, which carries a weight of 10.33% in the index, declined 9.3% in May compared with the same month last year. Its cumulative output contracted 9.1% during April–May. 

Crude oil production (weight: 8.98%) fell 4.6% year-on-year in May, while cumulative production declined 4.2% during the first two months of the fiscal year. 

Natural gas output (weight: 6.88%) dropped 4.9% in May and registered a cumulative decline of 4.5%. 

Petroleum refinery products, the largest component of the core industries index with a 28.04% weight, recorded an 8.7% contraction in May, with cumulative output down 4.7%. 

Fertiliser production (weight: 2.63%) also remained weak, declining 0.9% in May and 4.5% cumulatively during April–May. 

Steel, cement, and electricity provide support 

Despite weakness across several sectors, production growth remained positive due to strong performances in steel, cement and electricity. 

Steel output (weight: 17.92%) increased 5% in May compared with a year earlier, taking cumulative growth for April–May to 5.2%. 

Cement production (weight: 5.37%) rose 8.4% in May, while cumulative output expanded 8.3%. 

Electricity generation (weight: 19.85%) emerged as the strongest-performing segment, growing 8.7% in May and recording cumulative growth of 7.1% during the period. 

The eight core industries—coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity—collectively account for about 40% of the weight in the Index of Industrial Production (IIP), making them a key indicator of broader industrial activity.