May’s data for the eight core infrastructure sectors indicates a broad slowdown in industrial activity, exacerbated by a severe heatwave that increased the power consumption of homes, offices, and factories. The Index of Eight Core Industries, released by the Ministry of Commerce and Industry, revealed that only coal and electricity generation experienced double-digit growth, expanding by 10.2% and 12.8% respectively. In contrast, crude oil, fertilizers, and cement production shrank, while growth decelerated in natural gas, refinery products, and steel sectors. The heatwave’s impact was most severe in northern India, where it disrupted construction activities and pushed daily peak power demand at the Northern Regional Load Despatch Centre to or above 75 gigawatts. The demand for cement and steel waned as construction sites took afternoon breaks. The persistent contraction in fertilizer production, marking the fifth consecutive month of decline, raises concerns about the rural agricultural sector’s health. Official data for the core sector and the Index of Industrial Production, which it significantly influences, suffer from a lag of over a month. However, the HSBC India Manufacturing Purchasing Managers’ Index (PMI) for June suggests a rebound in factory activity from May’s heatwave-induced slump. June’s PMI reading of 58.3, up from May’s 57.5, indicates robust demand and increased output, with manufacturers stepping up hiring at the fastest pace recorded in over 19 years. Despite these positive signs, the increase in job creation and demand was accompanied by rising costs in staff, materials, and transportation, leading to the highest hike in selling charges in over two years. This inflationary trend, coupled with a decline in overall confidence in future output, suggests that the economy still faces challenges. Policymakers must seize the opportunity in the upcoming Union Budget to introduce measures that can bolster momentum in key industrial sectors and navigate the economic headwinds.