India's core sector growth hits seven-month low of 0.5% in May

India's core sector output grew by a mere 0.5% in May, the lowest reading in seven months, raising fresh concerns about the durability of the country's industrial recovery. The eight core industries — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity — form the backbone of the Index of Industrial Production and their near-stagnation is a warning signal for the broader manufacturing sector.

The deceleration is sharper than economists had anticipated, coming at a time when the government has been hoping for sustained momentum in infrastructure spending and industrial output. Factors such as weather-related disruptions, subdued global demand, and uneven credit offtake have all been cited as potential drags on sector performance in recent months.

The data, reported by Business Standard, will feed into the upcoming IIP numbers and is likely to draw scrutiny from the Reserve Bank of India as it calibrates its monetary policy stance. A sustained period of weak core sector output can weigh on corporate earnings, tax revenues, and ultimately, government capacity to fund capital expenditure.

For the broader Indian economy, which has attracted considerable optimism from global investors in recent quarters, this data point serves as a reminder that growth remains uneven. Policymakers will be watching the June figures closely to determine whether May's slump was a one-off or the beginning of a more sustained slowdown.