India's Core Sector Growth Slips to 0.5% in May 2026, Second Lowest in 21 Months

Growth in India's eight core industrial sectors slowed to 0.5% in May 2026, marking the second-lowest expansion in 21 months, according to official data released by the Ministry of Commerce and Industry on Monday.

The Index of Eight Core Industries (ICI) showed that five of the eight sectors contracted in May. The only month with slower growth in the past 21 months was October 2025, when the index contracted by 0.1%.

“Core sector growth in May was disappointing at 0.5% compared with 1.2% last year,” said Madan Sabnavis, chief economist at Bank of Baroda. “The lower growth number on a low base can be attributed more to the decline in production from the petroleum-based sector.”

The crude oil sector contracted by 4.6% in May, a sharper decline than the 3.9% contraction in April and the 1.8% contraction recorded in May 2025. Similarly, natural gas output fell by 4.9% in May, its worst performance in four months.

Refinery products recorded an 8.7% contraction in May, its steepest decline in three and a half years. According to Rahul Agrawal, principal economist at ICRA, this “partly reflects the fallout of the West Asia crisis.”

The coal sector also witnessed a contraction of 9.3%, its worst in ten months.

“Crude oil, natural gas, and refinery products all registered decline in production,” Mr. Sabnavis said. “This can be attributed more to higher import of crude and softening of prices in the international market. In the case of natural gas, with supply chains being addressed, domestic production tended to fall. Lower exports of petro products also contributed to decline in production.”

The fertiliser sector contracted for the third consecutive month in May, by 0.9%, although this was a milder decline compared to the 8.6% contraction in April and the 24.6% contraction in March.

Three sectors—steel, cement, and electricity—registered growth in May. Electricity generation grew by 8.7%, albeit on a low base as the sector had contracted by 4.7% in May 2025. Steel output growth slowed to a 16-month low of 5%, while cement production grew by 8.4%, down from 9.4% in April.

The core sector data is a key indicator of industrial activity, as these sectors account for about 40% of the Index of Industrial Production (IIP). The slowdown in May suggests subdued momentum in the broader economy, though analysts note that the low base effect and global factors have influenced the numbers.