The Hindu : Business : Infrastructure sector growth slumps in January

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Infrastructure sector growth slumps in January

Special Correspondent

Low demand and high interest rates hit performance

Negative growth in crude production
Sharp slide in electricity generation

NEW DELHI: In what appears to be a confirmation of an industrial slowdown, the growth rate of the six core infrastructure industries slumped to 4.2 per cent in January from 8.3 per cent in the same month a year ago.

Accordingly, the cumulative growth rate of core industries — crude petroleum, petroleum refinery products, coal, electricity, cement and steel — also suffered a steep decline to 5.5 per cent during April-January 2007-08 as compared to a healthier 8.9 per cent growth clocked during the same period in the previous fiscal.

The official data on the six core sectors released here on Tuesday revealed that crude oil production posted a negative growth of 0.2 per cent in January as compared to a positive 4.7 per cent growth notched up during the same month in 2007. The growth in coal production also fell steeply to 4.8 per cent from 9.9 per cent. Likewise, the growth in electricity generation witnessed a sharp slide to 3.3 per cent from 8.3 per cent while the cement sector also posted a lower growth of 5.2 per cent as compared to 7.2 per cent.

The performance of the core infrastructure industries group, which accounts for a weightage of 26.7 per cent in the overall index of industrial production (IIP), appears to have been hit by low demand and high interest rates, apart from the slowdown in economic growth.

The IIP data, it may be recalled, had revealed a sharp slide in industrial growth to 5.3 per cent in January from 11.6 per cent in the same month a year ago, mainly on account of a slump in all the major segments of the manufacturing sector along with electricity and mining. The slump witnessed in January also resulted in a moderation of the cumulative growth to 8.7 per cent during the first ten months of the current fiscal as compared a robust 11.2 per cent growth posted during the same period of 2006-07.

Among all the six core infrastructure industries, the worst performer during January was the petroleum refining sector which witnessed a slump in growth to 5.3 per cent from a robust 11.2 per cent posted in the same month in 2007.

Finished steel recorded a lower growth of 5.5 per cent as compared to 8.5 per cent while coal production grew by 4.8 per cent as compared to a much higher 9.9 per cent growth.

Cumulative period

For the ten month period also, the core infrastructure sector posted a decline in growth. While crude petroleum production grew by a mere 0.3 per cent as compared to 5.9 per cent, the growth in petroleum refining also declined to 7.3 per cent from 13 per cent.

Likewise, coal and electricity also witnessed lower growth at 4.8 per cent and 6.3 per cent as compared to 5.2 per cent and 7.6 per cent, respectively, achieved during the 10-month period last fiscal. The growth in cement production was lower at seven per cent as compared to 9.9 per cent. Finished steel performed poorly to post a low growth of 5.1 per cent as compared to 11.1 per cent.

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