Page 34 - Policy Economic Report - September 2026

POLICY AND ECONOMIC
OIL & GAS MARKET

The performance of the electricity and cement sectors was particularly notable. Electricity output
expanded by 11.6%, following 8.4% growth in July, while cement production increased by 12.5%, broadly
maintaining the strong 12.7% expansion recorded in the previous month. Iron ore production grew by
5.5%, although this represented a moderation from the exceptionally high 29.5% growth recorded in July.
Steel production also strengthened, with growth accelerating from 1.9% in July to 3.4% in August.

Figure 17: Index of Core Industries (ICI) and Year-on-Year Growth Rate (Aug 2025 – Aug 2026) (P)

Source: Office of Economic Adviser, DPIIT, Ministry of Commerce & Industry

The performance of the energy-related sectors was more mixed. Refinery-product output increased by
2.6%, improving modestly from 3.0% growth in July. However, crude oil and natural gas production
continued to contract, declining by 3.6% and 4.9%, respectively. Coal production also declined by 3.8%
after registering 7.6% growth in July. Fertiliser production recorded the sharpest contraction among the
eight sectors, falling 12.4% year-on-year, compared with an 8.0% decline in July.

The cumulative performance for the first five months of FY2026–27 remains encouraging. ICI growth
during April–August 2026 stood at 4.3%, substantially higher than the 2.4% growth recorded during the
corresponding period of FY2025–26. The cumulative expansion was driven particularly by electricity,
cement and iron ore, which grew by 21.8%, 10.3% and 9.6%, respectively, over the period. Steel also
expanded by 4.1%.

The sectoral composition of the ICI is important for interpreting the headline figure. Electricity carries the
largest weight at 30.932%, followed by refinery products at 22.572% and steel at 17.584%. Consequently,
the strong performance of electricity, cement and steel has provided substantial support to overall core-
sector growth, even as the contraction in coal, crude oil, natural gas and fertilisers has acted as a drag.

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