​Alarm bells, Pg6

Key Highlights:

• The Index of Eight Core Industries (ICI) grew by a modest 1.7% in April 2026, signaling a tepid start to the financial year 2026-27.
• Only three sectors (steel, cement, and electricity) showed growth in April 2026, while others contracted.
• Crude oil and natural gas sectors have contracted for 16 and 22 consecutive months, respectively.
• LNG imports were cut by 30% in April due to the absence of long-term gas storage facilities.
• Fertilizer output contracted in April, with anticipated lower demand due to a below-normal monsoon and above-normal El Niño.

Detailed Insights:

• The slowdown in the ICI began well before the West Asia crisis, with growth averaging just 2.8% in FY 2025-26, down from 4.5% in FY 2024-25.
• Falling output in the crude oil and natural gas sectors should have prompted policy action before the current energy crisis.
• The decline in domestic natural gas consumption in April could have been an opportunity to fill long-term gas storage if such facilities existed.
• Lower fuel consumption may result from government curbs on commercial usage, with severe implications for overall economic growth.
• Sustained construction activity, driven by government expenditure, is indicated by consistent growth in the steel and cement sectors.
• PMI data is near four-year lows, and GST collections from domestic sales are growing only slightly faster than inflation, raising concerns about the economy.
• A below-normal monsoon and above-normal El Niño are expected to lower demand for fertilizers, further impacting output and rural demand.

Key Concepts Involved:

• Index of Eight Core Industries (ICI): A monthly index that measures the combined production performance of eight core sectors in India.
• El Niño: A climate pattern describing the unusual warming of surface waters in the central and eastern tropical Pacific Ocean.
• Purchasing Managers' Index (PMI): An indicator of the economic health of the manufacturing and service sectors.
• Goods and Services Tax (GST): An indirect tax levied on the supply of goods and services.