"India's Core Industrial Growth Slows Amid Demand Weakness and Energy Import Costs"
Index of Eight Core Industries (ICI)
monthly output index covering eight infrastructure-linked sectors, comprising ~40.27% of IIP weight.
Base Effect
distortion in percentage growth rates caused by an unusually high or low value in the comparison period.
The Index of Eight Core Industries (ICI) tracks monthly output across eight infrastructure-linked sectors: coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity. These eight sectors together account for roughly 40.27% of the weight in the Index of Industrial Production (IIP), making the ICI a leading proxy for broader industrial momentum. The Office of the Economic Adviser (OEA) under the Ministry of Commerce and Industry releases ICI data monthly. Because these sectors supply inputs to almost every other part of the economy, steel and cement to construction, electricity to manufacturing, refinery products to transport, their performance shapes cost structures and investment decisions economy-wide.
India's core sector has historically been volatile, sensitive to monsoon-linked energy demand, global commodity prices, and government capital expenditure cycles. Post-pandemic recovery in the ICI was initially strong but uneven, with electricity and cement benefiting from infrastructure push while crude oil and natural gas remained structurally depressed due to ageing domestic fields and limited new exploration. The Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, complements the ICI by capturing forward-looking sentiment among factory managers; a reading above 50 signals expansion, below 50 signals contraction.
The ICI's eight sectors are not equally weighted. Refinery products carry the highest weight, followed by electricity, steel, and coal. This means a contraction in refinery products or a slowdown in steel has an outsized effect on the headline ICI number. Analysts therefore look beyond the headline to the composition of growth: which sectors are genuinely expanding on their own momentum, and which are recovering only because the prior-year base was depressed.
The base effect is a critical analytical concept for reading ICI data. When a sector contracted sharply in the same month of the previous year, even modest absolute output in the current month produces a high percentage growth rate. This can flatter the headline figure without reflecting genuine demand recovery. …
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Consider the following statements regarding the Index of Eight Core Industries (ICI):
1.The ICI covers coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity.
2.The combined weight of these eight sectors in the Index of Industrial Production (IIP) is approximately 40.27%.
3.The ICI is compiled and released by the National Statistical Office (NSO) under MoSPI.
Which of the statements given above is/are correct?
Which of the following best describes the 'base effect' in the context of interpreting India's Index of Core Industries (ICI) data?
Consider the following statements about India's energy import dependence:
1.India imports approximately 85% of its crude oil requirements.
2.Domestic crude oil and natural gas production have been in continuous contraction for over 14 months as per recent ICI data.
3.The Ethanol Blended Petrol (EBP) Programme targets 20% ethanol blending in petrol by 2030.
Which of the statements given above is/are correct?
The Manufacturing Purchasing Managers' Index (PMI) is best described as which of the following?
Assertion (A): A high percentage growth rate in a core industrial sector does not necessarily indicate robust underlying demand recovery.
Reason (R): When a sector contracted sharply in the same month of the previous year, even modest absolute output in the current year produces a high percentage growth rate.
Which one of the following is correct in respect of the above Assertion and Reason?
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