Core sector growth flat in Oct-25, as power output trips

21 Nov 2025 , 11:07 AM

OCTOBER 2025 CORE SECTOR GROWTH FLAT AT 0.00%

Core sector growth for October 2025 tapered to 0.00%. One can argue that the undertone remains positive for two reasons. Firstly, the September core sector growth got upgraded by 26 bps from 3.02% to 3.28%. That gives hope for October data revision. Also, the easing of core sector in October could be attributed to the base effect. Between September 2024 and October 2024, the core sector growth had surged from 2.44% to +3.84%. This base effect led to core sector growth dropping to 0.00% in October 2025.

In the last 2 months, the core sector growth has progressively fallen from 6.53% to 0.00%. While part of this fall is explained by the base effect, there are also concerns that capex by the government is faltering. As a result of flat growth in October, the core sector growth for first 7 months of FY26 stands at 2.54%, lower than 2.91% as of end September. This is also sharply lower than comparable numbers in FY25 and FY24. While capex concerns remain, the bulk of the pressure in October came from the power sector; coal and electricity.

CORE SECTOR LEADERS AND LAGGARDS IN OCTOBER 2025

A total of 4 out of 8 core sectors saw positive growth in October 2025. In the core sector basket, refinery products have highest weightage of 28.04%, followed by electricity at 19.85% and steel 17.92%. Of these 3 sectors, refining expanded by 4.58%, Steel grew 6.67%, and electricity contracted -7.56% in October 2025.

Another heavyweight contributor to the downside was coal at -8.55%. Steel and Cement are growing, but much slower than recent months. The delayed monsoons have impacted construction and infrastructure activity. A total of 4 out of the 5 fossil fuel components contracted; coal, oil exploration, natural gas, and electricity. Refining was an exception.

BREAKING DOWN OCTOBER 2025 CORE SECTOR GROWTH

The table captures breakdown of the 0.00% yoy core sector growth for October 2025 across 8 infrastructure baskets. Previous data points have been revised, appropriately. It may be recollected that both August and September core sector were upgraded by 26 bps.

Months	Overall (%)	Coal (%)	Crude (%)	Natural Gas (%)	Refinery (%)	Fertilizers  (%)	Steel  (%)	Cement (%)	Electricity  (%)
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	14.31	2.28
Feb-25	3.36	1.65	-5.17	-6.04	0.75	10.24	6.85	10.71	3.63
Mar-25	4.51	1.64	-1.90	-12.74	0.20	8.83	8.69	12.22	7.49
Apr-25	0.99	3.46	-2.75	-0.94	-4.50	-4.16	4.38	6.34	1.75
May-25	1.19	2.76	-1.80	-3.56	1.06	-5.89	7.44	9.65	-4.71
Jun-25	2.20	-6.81	-1.21	-2.77	3.36	-1.19	9.71	8.16	-1.21
Jul-25	3.75	-12.27	-1.31	-3.21	-1.12	2.02	16.58	11.57	3.72
Aug-25	6.53	11.36	2.38	-2.20	2.99	4.58	13.55	5.36	4.15
Sep-25	3.28	-1.19	-1.25	-3.83	-3.65	1.63	14.36	4.98	3.09
Oct-25	0.00	-8.55	-1.21	-5.04	4.58	7.38	6.67	5.29	-7.56

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

Let us look at some of the key performers and pressure points. Once again, oil extraction and natural gas were hit by supply chain issues and policy constraints. Refinery products expanded on the back of robust GRMs (gross refining margins), and it has a weight of 28.04% in core basket. This surge in refinery products prevented a fall in core sector. While cement and steel continued to grow, loss of momentum was palpable in October 2025.

HIGH FREQUENCY CORE SECTOR GROWTH (OCTOBER 2025)

The high frequency MOM data captures short term trends and subtle shifts.

Core Sector Component	Weight	Oct-25 (YOY) %	Oct-25 (MOM) %	FY26 Cumulative (%) #
Coal	10.3335	-8.55%	+13.40%	-2.01%
Crude Oil	8.9833	-1.21%	+3.66%	-1.06%
Natural Gas	6.8768	-5.04%	+3.29%	-3.11%
Refinery Products	28.0376	+4.58%	+9.67%	+0.36%
Fertilizers	2.6276	+7.38%	+7.30%	+0.75%
Steel	17.9166	+6.67%	-1.69%	+10.33%
Cement	5.3720	+5.29%	+5.01%	+7.33%
Electricity	19.8530	-7.56%	-9.94%	-0.14%
Core Sector Growth	100.0000	+0.00%	+1.18%	+2.54%

Data Source: DPIIT (# Apr-Oct data)

The high frequency MOM core sector expanded by +1.18% in October 2025; with 6 out of 8 core sectors showing MOM expansion. Interestingly, this is the first month of MOM expansion in core sector, after 4 consecutive months of MOM core sector contraction. Short term pressures on growth appear to have eased, but a few swallows do not make a summer and we need data points for confirmation. The pressure came from electricity and steel in terms of high frequency shift in core sector, while the positive tidings came from coal, refinery products, cement and natural gas.

In the last couple of months, we had spoken about distinct signs of core sector peaking. The stress is also visible in the FY26 data for the first 7 months of the fiscal year. Cement and steel have had an oversized positive impact on core sector growth. On the other hand, heavyweights like refinery products and electricity have been neutral in FY26, while coal, crude oil, and natural gas have been under pressure. It is fossil fuels pressure; once again!

CHARTING LONG TERM CORE SECTOR NARRATIVE

The cumulative core sector growth in first 7 months of FY26 stood at 2.54%. This is sharply lower than 4.26% in 7M-FY25 and 8.78% in 7M-FY24. To be fair, FY26 is on a much higher base, yet the fall is reflective of a perceptible slowdown in capex spending. Government is going slow on capex, while private sector capex is still tentative. This is ironic, as private sector is sitting on record cash; and has deployed cash for retiring debt rather than capex.

Over the last 13 years, the average core sector growth stands at 4.0%; and if the COVID year (FY21) is excluded, the average stands at 4.9%. At 2.54%, the FY26 figure is well short of the long-period average. The government capex cannot be as aggressive as FY23 and FY24 due to tepid in tax revenues and higher expenditure. The only hope is that the government gives a signal on capex; and the private sector takes over from there. That is workable!