JOIN USIn an indication that growth in industrial production may have taken a hit in fiscal 2017-18, government data on Tuesday showed that the country's eight infrastructure sectors slowed to a three-year low of 4.2% in the financial year ended March 31.
These eight infrastructure sectors – steel, coal, power, refinery products, natural gas, crude oil, fertilizer and cement – have a significant bearing on India's factory output and a 40.27% weight in the index of industrial production. A slower industrial production in turn has an adverse impact on the overall growth of the economy.
Steel production growth slowed to 5.6% in FY18, from 10.7% in the previous year, crude oil production growth declined 0.9% in the same year. Cement output, however, increased 6.3%, compared with 1.2% decline in the previous year, indicating construction activity may have started to look up. The cement sector too reported a healthy number.
On a month-on-month basis, the infrastructure growth slowed to a three-month low of 4.1% in March, compared to 5.3% in February. Growth in coal, natural gas, refinery and steel production were impacted in March.
In February, the infrastructure sector had seen a steep rise in cement and fertiliser output along with steel which pushed the overall growth to 5.3%.
A pick up in domestic demand due to government's commitment to build smart cities and housing for all by 2022, is expected to see steel and cement production up in the coming months although the risk of trade wars could affect exports and imports.