India's core sector maintains double-digit growth at 12.7% in June

In June, India's eight infrastructure sectors expanded by double digits for the second month in a row, despite a slowdown in sequential growth.

According to data provided by the industry department on Friday, the core sector gained 12.7% year on year in June but fell 4.1% sequentially. According to Aditi Nayar, chief economist at Icra, core sector growth has moderated from 19.3 per cent in May to 12.7 per cent in June, showing the normalising base. The disaggregated patterns of core sector data are quite diverse, ranging from a 1.7% decrease for crude oil to a 31.1 per cent rise for coal. Apart from coal, cement, refinery products, and electricity generation, growth in steel and natural gas was rather subdued in June.  According to Madan Sabnavis, chief economist of Bank of Baroda, core sector growth is excellent given the high base of 9.4% in June 2021. The International Monetary Fund (IMF) cut India's growth prediction for FY23 by 80 basis points to 7.4 per cent, citing less favourable external conditions and the central bank's quick tightening of policy.

The IMF noted in its April World Economic Outlook update that while a global recession in 2022 is ruled out with a growth forecast of 3.2%, the balance of risks is tilted to the negative, driven by a variety of factors that could harm global economic performance.

The IMF's downward revision of India's growth forecast comes only days after the Asian Development Bank reduced its growth forecast for India to 7.2 per cent for FY23, down from 7.5 per cent citing higher-than-expected inflation.