India's core sector growth hits 3-month high of 6.7% in February

Wednesday 03rd April 2024 06:59 EDT

Growth in India's core sector rose to a three-month high in Feb, led by double-digit expansion in three of eight segments but the fertiliser sector contracted for second consecutive month.

Data released by the commerce and industry ministry showed the infrastructure sector, spanning coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity rose an annual 6.7%, higher than the 4.1% in Jan but below the 7.4% in Feb last year.

The core sector accounts for 40% of the index of industrial production and has an important impact on the factory output numbers, which will be released later next month.

Separate data showed fiscal deficit reached 86.5% of the full year target at Feb-end. In the corresponding period last year, the fiscal deficit or gap between expenditure and revenue was 82.8% of the revised estimates (RE) of the Union budget for 2022-23. The govt estimates fiscal deficit at £ 174 billion or 5.8% of GDP.

“The surge in the fiscal deficit in Feb can be partly attributed to the higher tax devolution released during that month which led to a decline in the revenue receipts and net tax revenues in that month,” said Aditi Nayar, chief economist at ratings agency ICRA. “In April-Feb FY2024, the net tax revenues rose by 7%, non-tax revenues expanded by 45%, amid a mild 1% growth in revenue expenditure, and a robust 36.5% YoY expansion in capex. We do not expect the revised fiscal deficit target of Rs 17.3 trillion for FY2024 to be breached,” said Nayar.

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