Infrastructure Sector Growth Hits a Three-Month Low: What’s Behind the Decline?

Infrastructure Output Declines

New Delhi: The performance of nine major infrastructure sectors has dipped to a three-month low of 4.8% in August, primarily due to decreased production in coal, natural gas, crude oil, and fertilizers, as per the latest government statistics released on Monday.

In comparison, the output had increased by 6.2% in August of the previous year and by 5% in July of this year. The lowest output prior to this was recorded in May at 3.2%.

The figures indicate a decline in production for coal, natural gas, crude oil, and fertilizers by 3.8%, 4.9%, 3.6%, and 12.4%, respectively, in August.

Additionally, the growth rates for refinery products, steel, and iron ore also slowed to 2.6%, 3.4%, and 5.5%, compared to 3.4%, 15.3%, and 7.9% in August 2025.

On a positive note, cement and electricity production saw significant growth, increasing by 12.5% and 11.6%, respectively, in August.

From April to August, the overall growth rate was higher at 4.3%, compared to 2.4% during the same timeframe in 2025-26.

Rahul Agrawal, Principal Economist at ICRA Ltd, commented that the year-on-year growth in core output has slightly decreased in August, partly due to an unfavorable comparison base.

He noted that the slowdown was widespread, with six out of the nine sectors showing a decline in performance compared to the previous month. Specifically, coal and iron ore mining experienced significant drops in output in August relative to July, largely due to adverse base effects.

Fertilizer production has now contracted for six consecutive months, exacerbated by the ongoing crisis in West Asia, with the sector's growth rate widening into double digits this month, according to Agrawal.

He further stated, "Considering these trends, we anticipate the Index of Industrial Production (IIP) growth to decrease to around 5-6% in August 2026, down from 6.7% in July 2026."