Express view on Index of Eight Core Industries (ICI) for April 2025: If these industries are not growing fast enough, the rest of the economy is unlikely to

Indian Express

26-05-2025

The Index of Eight Core Industries (ICI) for April 2025 released by the Department for Promotion of Industry and Internal Trade shows that the monthly growth rate of the index fell to a nine-month low of just 0.5 per cent. In other words, the index grew just 0.5 per cent in April this year over the same month last year. This index comprises the eight most fundamental industrial sectors of the economy — coal, natural gas, crude oil, refinery products (such as petrol and diesel), fertilisers, steel, cement and electricity (with differing weights) — and it maps the volume of production in these industries. The eight core industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP). Since these eight industries essentially serve the role of a basic and/or intermediate ingredient in the functioning of the broader economy, this index's health is important to the state of the economy.
The performance in April suggests a sharp loss of growth momentum relative to the preceding months. For instance, the index had grown by 4.6 per cent in March. In comparison, data from the index shows that of the eight industries, six experienced a weakness in growth momentum. The worst affected set of industries was refinery products, which incidentally have the highest weightage in the index (almost 30 per cent), as they clocked a negative growth rate (a contraction) of 4.5 per cent; it is the poorest showing since November 2022. Crude oil and fertilisers also witnessed contraction while the electricity index grew by just 1 per cent. Apart from the data for April, also noteworthy was the data for the full financial year that ended in March. In 2024-25, the core industries index grew by 4.5 per cent; this is the slowest increase since the post-pandemic recovery in 2021-22.
At one level, the slowdown in April is understandable. The global economy received the shock of President Donald Trump's reciprocal tariffs and the ensuing surge of uncertainty has meant that most economic and financial metrics across the world have shown some impairment. However, the weakness, and especially the sharpness of it, and that too both in April and in the full year data for FY24, points to domestic causes as well. If these eight industries are not growing fast enough, the rest of the economy is unlikely to, either. Given the tepid start to the year, observers such as the Centre for Monitoring Indian Economy (CMIE) are dialling down the forecasts for both the June quarter as well as the full financial year. Readers and policymakers should watch out for two other data sets due to be released in days to come — the IIP and the GDP — to better understand the current state of the economy.