Summary
April 2024 witnessed the lowest growth in India’s core infrastructure sector in eight months, with an expansion rate of merely 0.5%. This marked slowdown reflects broader economic challenges affecting key industries that form the backbone of the country’s infrastructure—coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity. The reduced output in critical energy sectors such as crude oil and natural gas, coupled with decelerated growth in refinery products and fertilizers, contributed significantly to this subdued performance. Given that the core infrastructure sector is a crucial driver of economic activity and capital investment, its sluggish growth signals potential headwinds for India’s overall industrial production and infrastructure development.
The slowdown in April comes after a period of fluctuating growth rates in the sector, with notable declines observed since early 2024. While some industries like cement and steel continued to show resilience with moderate growth, the contraction in energy-related segments underscores ongoing vulnerabilities. Factors such as adverse weather conditions, elevated commodity prices driven by geopolitical tensions, and elevated comparative base effects from previous years have collectively dampened sectoral momentum. The sector’s performance is particularly significant in the Indian context, where infrastructure development is integral to the government’s vision of achieving developed nation status by 2047, supported by ambitious public investment programs and private sector participation.
In response to these challenges, the government has increased infrastructure capital outlays and implemented regulatory reforms aimed at attracting investment and facilitating project execution. Major infrastructure companies continue to demonstrate strong growth potential over the medium term, supported by ongoing projects in transportation, energy transition, and urban development. Nevertheless, the 0.5% growth rate in April highlights the fragility of progress and the need for sustained policy focus to address sectoral imbalances and stimulate broader economic activity.
Looking ahead, while global and domestic economic forecasts suggest moderate growth, the infrastructure sector’s recovery remains contingent on resolving supply-side constraints, stabilizing commodity markets, and accelerating investment flows. The interplay of these factors will be critical in shaping India’s infrastructure trajectory and its capacity to underpin long-term economic expansion.
Overview
April recorded the lowest growth in the core infrastructure sector in eight months, with a growth rate of just 0.5%. This slowdown reflects broader trends observed across various industries and markets, influenced by evolving economic conditions and investment patterns. The analysis highlights that thematic investments continue to focus on areas such as energy transition, transport decarbonization, and the circular economy, alongside sustained interest in hybrid infrastructure assets. These thematic priorities underscore a shift towards sustainable and resilient infrastructure development amid the challenging growth environment. The report provides a macro-level examination of investment and fundraising trends before delving into sector-specific analyses, addressing key frontier topics that shape the infrastructure landscape.
Core Infrastructure Sector
The core infrastructure sector is a critical indicator of economic performance, reflecting the growth and health of eight key industries that form the backbone of the economy. These eight core industries typically include sectors such as steel, cement, electricity, coal, crude oil, natural gas, refinery products, and fertilizers. The sector’s growth is measured on a year-on-year basis but reported monthly to provide timely insights into trends and developments.
The production levels of steel, cement, and electricity, among others, are essential for infrastructure projects such as roads, bridges, and power plants. These projects, in turn, improve connectivity and support other industries, creating a multiplier effect throughout the economy. Growth in any of the core industries tends to stimulate activity in related sectors, while a slowdown can have a ripple effect that hampers overall economic progress. Infrastructure development relies heavily on the performance of these core sectors, making their growth rates an important gauge of broader economic health.
In the Indian context, the infrastructure sector is pivotal to the country’s vision of becoming a developed nation by 2047. The government has prioritized infrastructure development through various initiatives, including the allocation of 3.3% of GDP to infrastructure in the fiscal year 2024, with an emphasis on transport and logistics. Urbanization is accelerating, with projections estimating that 40% of India’s population will live in urban areas by 2030, thereby increasing the demand for robust and climate-resilient infrastructure. The Smart Cities Mission has made significant progress, with over 6,700 projects completed by early 2024, demonstrating tangible advancements in urban infrastructure.
Further strengthening the sector, several major companies such as Adani Ports and Special Economic Zone Limited, IRB Infrastructure Developers Ltd, GMR Airports Infrastructure Ltd, and Larsen & Toubro Ltd have shown strong growth, reflected in their five-year compound annual growth rates (CAGR) ranging from approximately 21.75% to 45.86% as of August 2024. The National Infrastructure Pipeline (NIP), launched in 2019, outlines investments exceeding US$ 1.4 trillion over five years, targeting key sectors like transportation, energy, and water supply. Recent infrastructure milestones include the inauguration of national highway projects worth ₹13,585 crore (US$ 1.7 billion) in Bihar and connectivity projects totaling US$ 1.8 billion in Kolkata in 2024.
Foreign direct investment (FDI) has also played a substantial role, with Rs. 1,32,601.17 crore (US$ 26.76 billion) invested in construction development and Rs. 2,50,628.61 crore (US$ 35.24 billion) in infrastructure construction from April 2000 to September 2024. Notably, the Adani Group announced a Rs. 30,237 crore (US$ 3.46 billion) investment in Kerala over five years, focusing on infrastructure, logistics, and manufacturing. Metro rail expansion continues rapidly, with 945 km operational across 21 cities and 919 km under construction in 26 cities as of 2024. Mumbai’s monorail, at nearly 20 km, ranks as the third longest globally after systems in China and Japan. The logistics market is projected to reach US$ 320 billion by 2025, and overall infrastructure capital expenditure is expected to grow at a CAGR of 11.4% from 2021 to 2026, driven by spending on water supply, transport, and urban infrastructure.
Thus, the core infrastructure sector remains a cornerstone of economic development, with its growth reflecting both the immediate and long-term trajectory of the economy. However, periods of low growth, such as the 0.5% increase recorded in April 2024—the lowest in eight months—highlight challenges that require sustained policy attention and investment to ensure continued momentum.
Growth Trends
India’s core infrastructure sector, which comprises eight key industries—coal, crude oil, steel, cement, electricity, fertilisers, refinery products, and natural gas—has exhibited fluctuating growth rates over recent months. In January 2024, the sector recorded a growth rate of 3.6 percent, marking the lowest in 15 months. This decline was driven by five out of the eight sectors either contracting or growing at a slower pace compared to December 2023, notably with fertiliser production falling by 0.6 percent after a 5.8 percent growth in the previous month. The sector’s growth in January 2023 had been significantly higher at 9.7 percent, while the cumulative growth for April 2023 to January 2024 stood at 7.7 percent year-on-year, slightly lower than 8.3 percent recorded in the same period the previous fiscal year.
By March 2025, the growth in core infrastructure sectors further slowed to 3.8 percent, a notable decline from 6.3 percent in March 2024. Despite this, March’s growth was marginally better than February 2025’s 3.4 percent. The moderation was largely attributed to contractions in crude oil and natural gas outputs, coupled with decelerations in coal, refinery products, steel, and electricity growth rates. Sector-specific performance in earlier months showed mixed results: cement, coal, electricity, and steel sectors demonstrated robust growth ranging between 12.1 percent and 28.6 percent, whereas crude oil, natural gas, and refinery products experienced declines of up to 9.3 percent. Fertiliser production improved in November 2024, growing 6.4 percent compared to 5.4 percent in October, supported by an increase in rabi crop sowing. Between April and November 2024, the core sector posted an 8 percent growth year-on-year, benefiting from favorable base effects and positive performances during the fiscal year.
April 2024 Growth Analysis
In April 2024, India’s core infrastructure sector recorded its lowest growth rate in eight months, expanding by only 0.5 percent. This marked a significant slowdown compared to previous months and reflected a broader moderation trend in key industrial outputs. The core infrastructure sector comprises eight critical industries: coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity.
The decline in growth was influenced by contractions or slower expansion in multiple sectors. Fertiliser production notably fell by 0.6 percent in January after a 5.8 percent growth in December 2023, while overall output in January was the lowest in 15 months at 3.6 percent growth. Although the commerce ministry revised the core sector growth for December 2023 upward to 4.9 percent, the momentum could not be sustained into April.
Sector-wise, the slowdown in April 2024 was largely driven by decreased production in crude oil and natural gas, which had already exhibited contractions in preceding months. Other key sectors such as coal, refinery products, steel, and electricity also demonstrated decelerated growth rates compared to the previous year. Conversely, cement maintained relatively stronger performance, with growth rates around 11.6 percent, consistent with prior months.
The cumulative growth of the eight core sectors for the fiscal year 2023-24 remained modest, standing at 4.4 percent by the end of March 2024—markedly lower than the 7.6 percent recorded in the previous fiscal year. This slowdown is reflective of both domestic and global challenges, including persistent geopolitical tensions that have kept commodity prices, particularly oil, elevated despite slowing global growth.
Furthermore, the Industrial Production Index (IIP) data projected a moderate growth range of 3.5 to 5 percent for March 2024, highlighting mixed performance among the infrastructure-related sectors. Steel output grew by 12.3 percent, coal by 11.7 percent, and cement by 9.1 percent, while electricity generation experienced its slowest rise in three years at 7 percent, and natural gas grew 6.1 percent.
The slowdown in April’s core infrastructure growth underscores ongoing challenges in maintaining industrial momentum amid fluctuating commodity prices and evolving economic conditions. The deceleration in core sector growth impacts the broader economy as these sectors are fundamental to infrastructure development, which in turn supports overall economic growth and connectivity.
Factors Contributing to Record-Low Growth
The record-low growth of 0.5% in the core infrastructure sectors in April 2024 was influenced by multiple interrelated factors affecting production and demand across key industries. Notably, five out of the eight core sectors experienced either contraction or significantly slower growth compared to previous months, which dragged down the overall expansion rate.
One major factor was the decline in output within crucial energy-related sectors such as crude oil, refinery products, and fertiliser, all of which posted negative growth figures in April. This contrasted with earlier months when these sectors had shown modest increases or stability. The fall in fertiliser production, in particular, reversed from a 5.8% growth in December 2023 to a 0.6% decline in January and continued underperformance thereafter. These downturns were exacerbated by adverse weather conditions; excess rainfall negatively impacted mining activities, reducing coal, crude oil, and natural gas production, while also constricting electricity generation.
Another contributory aspect was the elevated base effect from the previous year. For example, August 2023’s deficient rainfall had temporarily boosted outputs in sectors like coal and electricity, setting a high comparative benchmark that was difficult to match in 2024. Consequently, despite some sectors such as cement, coal, electricity, and steel showing robust growth ranging between 12.1% and 28.6% in certain months, the overall impact was insufficient to offset declines elsewhere.
Broader macroeconomic conditions also played a role. Persistent geopolitical tensions since 2022 have kept commodity prices, particularly oil, elevated, creating inflationary pressures and supply uncertainties that may have constrained production expansion. While global commodity prices have stabilized recently, the preceding volatility influenced investment decisions and operational costs within infrastructure-related industries.
Furthermore, infrastructure development spending, although increased in recent years as a percentage of GDP—reaching 3.4% in 2024 from 1.7% in 2019-20—has yet to fully counterbalance sectoral slowdowns. Capital outlays for infrastructure have risen, but delivery challenges across housing, water, sanitation, and digital transport infrastructure remain, limiting the overall stimulus effect on core industries.
The interconnectedness of core sectors means that weakness in one area can ripple across others, amplifying the slowdown. For instance, reduced production in crude oil and natural gas impacts electricity generation and refinery output, which in turn influences cement and steel demand due to construction activity variations. This multiplier effect highlights the vulnerability of the infrastructure ecosystem to sector-specific shocks.
Sector-wise Performance Analysis
India’s core infrastructure sectors exhibited varied performance in the months leading up to April 2025, culminating in the lowest growth rate in eight months at 0.5% for April itself. This marks a significant slowdown compared to the 6.3% growth recorded in the same month the previous year, although it reflects a slight improvement over the 3.4% growth seen in February 2025. The overall cumulative growth for the financial year 2024-25 (April–March) stood at 4.4%, sharply down from 7.6% in the prior fiscal year.
Breaking down sector-specific performance, several key segments faced deceleration. Crude oil and natural gas production notably contracted during the month, adversely affecting the overall output. Other critical sectors such as coal, refinery products, steel, and electricity also experienced slower growth rates compared to previous periods. Cement production, however, bucked the trend by growing 11.6% in March 2025, up from 10.6% a year earlier.
The steel industry demonstrated resilience with a 12.3% growth rate in 2023-24, supported by strong demand and infrastructure activities, followed by coal at 11.7% and cement at 9.1% growth. Electricity generation recorded a 7% increase, marking the slowest expansion in three years, while natural gas output rose by 6.1%. Fertilizer and refinery product outputs showed moderate growth of 3.7% and 3.4%, respectively.
Government-led infrastructure investments continue to be a significant growth driver. The capital outlay for infrastructure was increased by 11.1% in the Interim Budget 2024-25, focusing on expanding water supply, transport, and urban infrastructure. As part of these initiatives, substantial investments have been made in metro rail projects—945 km are operational across 21 cities with an additional 919 km under construction in 26 cities—while the logistics market is projected to reach US$ 320 billion by 2025. Noteworthy corporate investments include the Adani Group’s planned Rs. 30,237 crore (US$ 3.46 billion) investment in Kerala aimed at infrastructure, logistics, and manufacturing growth over the next five years.
Despite the challenges, infrastructure companies such as Adani Ports and Special Economic Zone Limited, IRB Infrastructure Developers Ltd, GMR Airports Infrastructure Ltd, and Larsen & Toubro Ltd continue to demonstrate strong compound annual growth rates (CAGR) over five years, ranging from approximately 22% to 46%, underscoring the sector’s long-term potential. Larsen & Toubro, for instance, secured key orders including a 112.5 MW solar power plant in West Bengal and a
Macroeconomic Context and Correlations
Global economic growth is projected to remain moderate in the near term, with the world economy expected to grow at around 3.2 percent during 2024 and 2025, consistent with the pace observed in 2023. Advanced economies are forecasted to experience a slight acceleration, with growth rising from 1.6 percent in 2023 to 1.8 percent by 2025, while emerging markets and developing economies are anticipated to see a modest slowdown from 4.3 percent in 2023 to 4.2 percent in the following years. Despite these projections, risks to growth remain tilted to the downside, primarily due to escalating inflationary pressures, trade tensions, and policy uncertainties.
Inflation dynamics continue to pose challenges for economic stability, with global inflation expected to decline gradually from 6.8 percent in 2023 to 4.5 percent by 2025. However, core inflation is projected to ease more slowly, particularly in emerging markets and developing economies. These inflationary pressures complicate monetary policy normalization and contribute to the persistence of higher interest rates, which can adversely impact investment flows, especially in capital-intensive sectors such as infrastructure.
In this context, the core infrastructure sector’s performance is closely intertwined with broader macroeconomic trends. The combined Index of Eight Core Industries (ICI), which includes coal, electricity, steel, cement, fertilizers, refinery products, and natural gas, showed moderate growth rates, with an increase of 6.2 percent year-on-year in April 2024 and 4.4 percent during April 2024 to January 2025. Nevertheless, April recorded the lowest growth rate of 0.5 percent in eight months, highlighting the sector’s sensitivity to fluctuations in economic activity and input costs.
Foreign direct investment (FDI) in construction and infrastructure development sectors remains significant but is also subject to global economic conditions and investor sentiment, which have been impacted by heightened macroeconomic risks and geopolitical uncertainties. The slowdown in new capital formation in infrastructure reflects the broader tightening financial environment, influenced by elevated interest rates and subdued investor appetite in certain markets.
Trade and global value chains have increasingly become channels for spillovers from economic shocks, particularly those originating in major emerging economies like China. These spillovers affect production patterns and investment decisions in other countries, thereby influencing infrastructure sector growth globally. Additionally, trade tensions and tariff adjustments continue to generate volatility, affecting growth, inflation, and employment prospects, which in turn have repercussions on infrastructure development timelines and financing.
Investment and Financing Landscape
The investment and financing landscape for the core infrastructure sector in India during 2024 reflects a mix of significant capital outlays, evolving investor sentiment, and shifts in deal-making strategies. The Interim Budget 2024-25 increased capital investment outlay for infrastructure by 11.1% to Rs. 11.11 lakh crore (US$ 133.86 billion), which corresponds to 3.4% of the country’s GDP. This marks a notable rise from 1.7% of GDP in 2019-20, illustrating the government’s heightened focus on infrastructure as a growth driver. Additionally, a long-term loan outlay of Rs. 1.5 trillion was allocated to states to support infrastructure projects, further underpinning public financing efforts.
Foreign Direct Investment (FDI) in the construction development and infrastructure construction sectors has also been substantial, with Rs. 1,32,601.17 crore (US$ 26.76 billion) and Rs. 2,50,628.61 crore (US$ 35.24 billion), respectively, recorded between April 2000 and September 2024. Private sector commitments include the Adani Group’s announced investment of Rs. 30,237 crore (US$ 3.46 billion) over five years in Kerala, targeting infrastructure, logistics, and manufacturing sectors, signaling strong corporate interest in regional development opportunities.
Private equity and venture capital activity exhibited robust growth, with November 2024 witnessing PE/VC investments worth US$ 4 billion across 87 deals—a 156% year-on-year increase. This surge highlights increased investor confidence and capital flow into infrastructure-related ventures, especially in digital and payment sectors, with Unified Payments Interface (UPI) remaining a preferred mode for about 38% of Indians in rural and semi-urban areas.
Globally, infrastructure deal-making and fundraising experienced a slowdown in 2023, with a 22% decline in deal value and 14% in volume year-over-year. Despite this, North America remained an exception to the trend. The high interest rate environment shifted deal strategies towards credit and joint ventures rather than traditional mergers and acquisitions. However, as capital costs begin to recede in 2024, an uptick in deal activity is expected, particularly in renewables, battery storage, and nuclear sectors—areas favored by limited partners in infrastructure allocations.
Investor sentiment varies across sub-sectors, with more optimism in Transport, Energy, Digital, and Hybrid Infrastructure compared to Social Infrastructure and Utilities. The consolidation wave that began in 2022 continued into 2024, exemplified by major acquisitions such as BlackRock’s purchase of GIP and General Atlantic’s acquisition of Actis. This consolidation reflects a strategic realignment among infrastructure investors in response to evolving market dynamics.
The evolving financing environment also features a strong emphasis on infrastructure debt and higher-yielding investment vehicles, supported by sustained high interest rates. The ongoing energy transition and innovations driven by artificial intelligence are expected to spur project finance activity within digital infrastructure, aligning capital deployment with technological advancement and sustainability goals.
Implications of Low Growth in Core Infrastructure
The deceleration of growth in India’s eight core infrastructure sectors to 0.5% in April 2024, marking an eight-month low, signals significant economic challenges. These core sectors—comprising coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity—are fundamental building blocks of the Indian economy and directly impact broader industrial activity and infrastructure development. The slowdown reflects negative production trends in key segments such as crude oil, refinery products, and fertilizers, which have contributed to the subdued growth rate compared to the 6.9% expansion recorded in the same period the previous year.
The implications of this low growth are multifaceted. First, the decline hampers the production of essential materials like steel, cement, and electricity that are vital for infrastructure projects including roads, bridges, and power plants. This slowdown can delay ongoing construction activities and reduce the pace of new infrastructure development, thereby affecting overall economic growth and connectivity improvements. Moreover, the contraction in production in sectors such as coal and natural gas may lead to energy supply constraints, which could impact manufacturing and other energy-intensive industries.
Second, the sustained low growth in core sectors poses risks to investment sentiment. Given that these sectors are closely linked to capital expenditures, a deceleration can dampen industry confidence and delay planned investments. Although there are projections of growth in capital expenditures fueled by fixed broadband and future mobile technologies like 6G, the current performance of core sectors may impede the realization of such investments in the short term.
Third, this slowdown also has broader macroeconomic consequences. The reduced output growth in core infrastructure sectors contributes to lower industrial production indices, which can affect employment generation and income levels in associated industries. Considering the significant role of core sectors in the supply chain, their sluggishness can ripple through the economy, slowing down growth in other sectors and leading to subdued GDP growth overall.
Finally, in a global context marked by slowing productivity growth and inflationary pressures, the poor performance of India’s core sectors adds to the challenges faced by policymakers aiming to sustain robust economic expansion. The diminished momentum in infrastructure growth necessitates targeted policy interventions to revive production and investment, ensuring infrastructure development remains a catalyst for economic growth.
Government and Industry Responses
The Indian government has demonstrated strong commitment to bolstering the infrastructure sector as part of its broader economic goals, particularly the target of reaching a US$ 5 trillion economy by 2025. In the Interim Budget 2024-25, the capital investment outlay for infrastructure was increased by 11.1% to Rs. 11.11 lakh crore (approximately US$ 133.86 billion), which constitutes about 3.4% of the GDP. This increase in budget allocation reflects the government’s focus on enhancing delivery across various infrastructure domains, including housing, water and sanitation, digital infrastructure, and transportation, aiming to improve economic growth, quality of life, and sectoral competitiveness. Additionally, the government has allocated Rs. 1.5 trillion for long-term loans to states to support infrastructure projects, doubling infrastructure spending over the past three years as part of its economic stimulus.
Alongside budgetary support, significant regulatory reforms have been introduced to facilitate easier market entry for global investors and boost sectoral growth. Key changes in 2024 included the Patents (Amendment) Rules aimed at streamlining patent procedures, liberalization of foreign direct investment (FDI) norms in sectors such as banking, insurance, defence, and notably the space sector with up to 100% FDI permitted under relaxed conditions. Regulatory simplification efforts like the Jan Vishwas Act have reduced over 40,000 compliance requirements, aligning Indian regulations with global standards and improving the ease of doing business.
Industry players are also playing a crucial role in advancing the infrastructure sector. Leading companies such as Adani Ports and Special Economic Zone Limited, IRB Infrastructure Developers Ltd, GMR Airports Infrastructure Ltd, and Larsen and Toubro Ltd have reported robust five-year compound annual growth rates (CAGR) of 32.91%, 45.86%, 45.74%, and 21.75%, respectively, as of August 2024. The growth of these companies underlines the vital contribution of private sector innovation and investment to the infrastructure ecosystem.
However, the sector faces challenges due to complex and sensitive macroeconomic conditions, including volatile energy prices, raw material availability, supply chain disruptions, and political risks. Industry leaders emphasize the importance of commercially and financially adept leadership to navigate these risks by balancing risk and reward, and by assimilating both global and local challenges to foster productivity and innovation. Furthermore, the infrastructure investment landscape has seen a degree of consolidation with major private equity buyouts continuing into 2024, including high-profile acquisitions by BlackRock and General Atlantic.
Emerging trends such as the accelerated buildout of AI-related infrastructure—data centers, clean power, and grid infrastructure—also shape the sector’s future outlook. While some investors have expressed caution regarding the pace and profitability of generative AI applications, the demand for underlying digital infrastructure remains strong and is expected to support the sector’s rebound.
Future Outlook
Despite the recent slowdown in the growth of the core infrastructure sectors, the near-term future outlook appears cautiously optimistic. While the growth rate in April decelerated to 0.5%, marking an eight-month low, projections for global economic growth remain stable at around 3.3 percent for both 2025 and 2026. This forecast includes an upward revision for the United States, balancing downward revisions elsewhere, which could positively influence infrastructure demand and investment globally.
In the context of infrastructure investments, challenges such as persistent macroeconomic headwinds that began in 2022 continue to affect deal activity and fundraising, particularly in infrastructure mergers and acquisitions. However, there is an improving sentiment compared to the previous year, suggesting a potential stabilization or modest recovery in infrastructure markets in the near term.
Capital values in infrastructure are expected to remain stable in 2024, supported by a more favorable economic growth outlook. Inflation-linked revenues have helped offset the negative impacts of rising interest rates over the past three years, although listed infrastructure sectors, especially those considered defensive like utilities and wireless towers, underperformed as investor focus shifted towards technology and AI-related equities.
On a national level, the complexities and risks associated with large-scale infrastructure projects, including megaprojects, continue to pose challenges. These projects often face cost overruns and delays due to their scale and scope, putting pressure on delivery capabilities across public and private sectors. Additionally, some large projects are expanding beyond their original objectives, increasing the potential for inefficiencies and risks.
In India specifically, despite recent moderation in growth rates among the eight core infrastructure sectors, significant investments are underway, including the opening of five mega infrastructure projects expected to transform urban infrastructure, particularly in metropolitan regions like Delhi-National Capital Region and Mumbai Metropolitan Region. This could signal positive long-term impacts on infrastructure capacity and economic growth. However, the mixed performance across sectors—with strong growth in cement, coal, electricity, and steel contrasted by contractions in crude oil, refinery products, and natural gas—indicates a continuing uneven recovery that requires close monitoring.
The content is provided by Jordan Fields, Clear Reporters
