April core sector tapers to 0.49%; as refining output takes a hit

21 May 2025 , 09:08 AM

APRIL CORE SECTOR SUBDUED, AS REFINING HIT HARD

Core sector growth for April 2025 at 0.49% marked the lowest level in 8 months. It was sharply lower than the March 2025 core sector growth of 4.63% (revised up from 3.83%). Effective April, core sector growth for previous month is announced on the 20th, rather than on the last day of the month. While there was no change in the final revisions for January 2025, the first revision for March 2025 saw core sector upgraded by 80 bps to 4.63%.

There has been some impact of the border situation and tough trade conditions on the output of refinery products and fertilizers. Refinery products contracted in April 2025 on the back of crude supply disruptions and sharply lower gross refining margins (GRMs). The war-like situation and the tariff uncertainty also forced the government to go slow on capex. That impacted overall core sector growth, and pushed to an 8-month low.

CORE SECTOR LEADERS AND LAGGARDS IN APRIL 2025

In the 8-infrastructure core sector basket, refinery products has the highest weightage of 28.04%, followed by electricity at 19.85% and steel 17.92%. These 3 sectors were under pressure in April. While Steel grew at 2.95%, electricity grew 1.04%, but refinery products contracted -4.50%, pulling core sector down. Cement did show some traction in April at 6.66%, but the weakness in the 3 heavyweight sectors eventually made the difference. Apart from refinery products, even fertilizers contracted by -4.16% on supply chain issues, while oil extraction contracted -2.75%, which has almost become the norm.

BREAKING DOWN APRIL 2025 CORE SECTOR GROWTH

The table captures breakdown of the +0.49% yoy core sector growth for April 2025 across 8 infrastructure baskets. All previous data are subsequent to revisions.

Months	Overall (%)	Coal (%)	Crude (%)	Natural Gas (%)	Refinery (%)	Fertilizers  (%)	Steel  (%)	Cement (%)	Electricity  (%)
Apr-24	6.94	7.51	1.73	8.56	3.92	-0.76	9.83	0.16	10.24
May-24	6.86	10.20	-1.14	7.51	0.50	-1.66	8.94	-0.63	13.74
Jun-24	5.00	14.78	-2.62	3.27	-1.54	2.45	6.31	1.79	8.58
Jul-24	6.27	6.82	-2.92	-1.27	6.62	5.31	6.99	5.12	7.94
Aug-24	-1.45	-8.05	-3.44	-3.61	-1.03	3.15	4.13	-2.53	-3.72
Sep-24	2.44	2.64	-3.87	-1.30	5.76	1.89	1.81	7.58	0.49
Oct-24	3.84	7.76	-4.85	-1.25	5.20	0.37	5.71	3.14	1.96
Nov-24	5.78	7.49	-2.12	-1.94	2.90	2.02	10.54	13.10	4.42
Dec-24	5.09	5.29	0.65	-1.76	2.83	1.67	7.31	10.32	6.17
Jan-25	5.08	4.64	-1.14	-1.51	8.31	2.96	4.73	14.62	2.38
Feb-25	3.36	1.65	-5.17	-6.04	0.75	10.24	6.85	10.76	3.63
Mar-25	4.63	1.64	-1.90	-12.74	0.20	8.83	9.28	12.22	7.49
Apr-25	0.49	3.46	-2.75	0.40	-4.50	-4.16	2.95	6.66	1.04

Data Source: DPIIT (Department for Promotion of Industry and Internal Trade)

Let us look at some of the key performers and pressure points. On the downside, refinery output was hit by supply disruptions and low GRMs; while fertilizers were impacted by supply chain issues and lack of regulatory clarity. On the upside, only cement showed good traction, but most of the heavyweight core sectors were either flat, or contracted.

HIGH FREQUENCY CORE SECTOR GROWTH (APRIL 2025)

While regular yoy growth captures long-term trends, it is sensitive to the base effect. High frequency MOM data captures short term trends in core sector.

Core Sector Component	Weight	Apr-25 (YOY) %	Apr-25 (MOM) %	FY26 Cumulative (%) #
Coal	10.3335	+3.46%	-31.09%	+3.46%
Crude Oil	8.9833	-2.75%	-4.13%	-2.75%
Natural Gas	6.8768	+0.40%	+8.53%	+0.40%
Refinery Products	28.0376	-4.50%	-10.59%	-4.50%
Fertilizers	2.6276	-4.16%	-11.03%	-4.16%
Steel	17.9166	+2.95%	-9.99%	+2.95%
Cement	5.3720	+6.66%	-16.69%	+6.66%
Electricity	19.8530	+1.04%	-2.41%	+1.04%
Core Sector Growth	100.0000	+0.49%	-11.25%	+0.49%

Data Source: DPIIT (# 1-month data)

In calendar year 2025, high frequency core sector growth has been negative in 3 out of the 4 months. In April, the MOM core sector output contracted by -11.25%. A total of 7 out of the 8 core sectors exhibited contraction in MOM output, with only natural gas doing better than in March. The positive MOM growth in March 2025, may have been more of a year-end effect, and April looks like a return to reality.

CHARTING LONG TERM STORY OF CORE SECTOR GROWTH

The cumulative core sector growth for FY25 was stable at 4.44%. However, FY25 core sector growth is sharply lower compared to 7.61% in FY24, 7.80% in FY23, and 10.41% in FY22! If one looks at the average core sector growth of the 13 previous fiscal years, it stands at 4.0%.  However, if the COVID year (FY21) is excluded, the average stands at 4.9%. Just as India was planning to get its capex back in order; the tariff puzzle and the border situation has again raised a question mark over infrastructure growth. Remember, capex has hardly grown in the last 2 years and this uncertainty is proving to be the added dampener!