Despite consistent positive growth in Steel and Cement sectors in FY 2025-26, overall ICI growth has remained subdued. What does this suggest about the quality and breadth of India's industrial recovery?

Q. Despite consistent positive growth in Steel and Cement sectors in FY 2025-26, overall ICI growth has remained subdued. What does this suggest about the quality and breadth of India's industrial recovery? (15 marks, 250-350 words)

The Index of Eight Core Industries (ICI), which accounts for 40.27% of the weight of items in the IIP, grew by just 0.5% (provisional) in May 2026, even as Steel and Cement sustained strong momentum through FY 2025-26 [1]. This divergence points to a recovery that is real but narrow, construction-led and energy-insecure.

Breadth: growth confined to a few sectors - Only three of eight sectors — Steel, Cement and Electricity — recorded positive growth in May 2026; the remaining five dragged the composite to near-stagnation [1]. - FY 2025-26 cumulative growth was led by Steel (+9.5%) and Cement (+8.7%), while Electricity managed only about 1% [2]. - A recovery resting on two sectors is vulnerable to a single demand shock, since construction demand is the common driver of both.

Quality: the energy-upstream core is contracting - In May 2026, Coal fell 9.3%, Crude Oil 4.6%, Natural Gas 4.9% and Petroleum Refinery products 8.7% [1]. - Refinery products alone carry a 28.04% weight — larger than Steel (17.92%) and Cement (5.37%) combined — so their contraction arithmetically neutralises the gains [1]. - Falling domestic crude and gas output deepens hydrocarbon import dependence, pressuring the current account and input costs downstream.

What this implies for the recovery's character - Momentum appears public-capex-driven — National Infrastructure Pipeline and PM Gati Shakti works directly consume steel and cement — rather than powered by broad-based private investment or consumption. - Weak coal and electricity growth suggests supply-side mining and logistics constraints, not merely soft demand.

India's industrial revival is therefore genuine at its construction end but shallow in depth and uneven in spread. Sustaining it requires broadening the drivers — accelerating exploration and production reforms in hydrocarbons, easing coal evacuation bottlenecks, and coupling infrastructure capex with private manufacturing investment. A recovery that lifts all eight core sectors, not two, would align industrial growth with the goals of energy security and SDG-9 (industry, innovation and infrastructure).

(~320 words)

Sources: 1. INDEX OF EIGHT CORE INDUSTRIES (BASE YEAR: 2011-12=100) FOR MAY 2026, PIB — May 2026 ICI growth of 0.5%; sector-wise growth and contractions; sectoral weights; 40.27% share in IIP 2. INDEX OF EIGHT CORE INDUSTRIES (BASE YEAR: 2011-12=100) FOR APRIL, 2026, PIB — FY 2025-26 cumulative growth of Steel, Cement and Electricity