India’s crucial core sector output experienced a significant contraction of 0.4 per cent in March, marking its first decline in five months, driven by reduced production in key areas like coal, crude oil, fertiliser, and electricity.
Photograph: Ajay Verma/Reuters
Key Points
- India’s core sector output contracted by 0.4 per cent in March, the first decline in five months.
- Production of coal, crude oil, fertiliser, and electricity all experienced a fall during March.
- Fertiliser output plunged by an unprecedented 24.6 per cent year-on-year due to input shortages amidst the West Asia crisis.
- The eight core infrastructure sectors recorded a growth rate of 2.6 per cent in 2025-26, down from 4.5 per cent in 2024-25.
- ICRA anticipates the Index of Industrial Production (IIP) growth to slow to 1-2 per cent in March 2026, compared to 5.2 per cent in February 2026.
The core sector output contracted by 0.4 per cent in March, marking the first decline in five months as production of coal, crude oil, fertiliser, and electricity fell, according to official data released on Monday.
In February 2026, the eight core infrastructure sectors had expanded by 2.8 per cent.
Annual Growth and Sectoral Performance
In 2025-26, these sectors recorded a growth rate of 2.6 per cent as against 4.5 per cent in 2024-25.
Production growth of refinery products, steel, and cement slowed down to 0.1 per cent, 2.2 per cent and 4 per cent, respectively, in March this year.
However, natural gas production recorded healthy growth during the month under review.
Expert Analysis and Outlook
Commenting on the data, Aditi Nayar, Chief Economist at Icra Ltd, said the core sector output contracted for the first time in five months in March, amidst a decline in production across four of the eight sectors.
In October 2025, the production growth of these eight sectors had contracted by 0.1 per cent.
“While an adverse base weighed on electricity generation, a shortage of inputs amidst the West Asia crisis curtailed the fertiliser output, which plunged by an unprecedented 24.6 per cent YoY in the month,” she said.
Given these trends and the adverse impact of the surge in energy prices and constrained availability, ICRA expects the IIP (Index of Industrial Production) growth to slow to about 1 – 2 per cent in March 2026 as against 5.2 per cent in February 2026, she added.
