War impact: Core industries' output dropped 0.4% in March, Pg17

Key Highlights:

• Output of the eight core industries contracted by 0.4% year-on-year in March 2026, the first decline since October 2025.
• Fertilizer production saw the largest drop, decreasing by 24.6% compared to March 2025.
• In FY26, the eight core industries' output increased by only 2.6%, the worst annual performance since 2020-21.
• The government approved a 12% increase in the nutrient-based subsidy for Kharif crops to Rs 41,534 crore.

Detailed Insights:

• The decline in core industries' output is attributed to the West Asia war, leading to higher energy prices and supply disruptions.
• The 24.6% fall in fertilizer output in March 2026 is the largest on record, influenced by the closure of the Strait of Hormuz.
• The wholesale price of ammonia gas in India jumped 22% in March 2026, impacting fertilizer production costs.
• The government increased the fertilizer subsidy allocation to Rs 1.86 lakh crore in FY27 to shield farmers from rising prices.
• Besides fertilizers, crude oil production fell by 5.7%, and coal production decreased by 4% in March 2026.
• Higher rainfall in March 2026 reduced power demand, leading to a 0.5% decrease in electricity production.
• The eight core industries constitute approximately 40% of the Index of Industrial Production (IIP), impacting overall industrial growth.

Key Concepts Involved:

• Index of Industrial Production (IIP): A composite indicator that measures the changes in the volume of production of industrial products.
• Nutrient-Based Subsidy (NBS): A subsidy scheme for fertilizers, where the subsidy is fixed on an annual basis based on the nutrient content.
• Kharif Crops: Crops sown in the monsoon season (June-July) and harvested in autumn (September-October).

IIP