Core sector growth at 9-month low

 Following economic growth dipping to a decadal low in the first quarter of 2012-13, it is the turn of India’s industrial production to take a hit. The country’s eight key infrastructure sectors registered only 1.8 per cent rise in July as against 8.2 per cent in the same month last year.

The decline in production of crude oil, natural gas and fertilisers impacted infrastructure output growth, which has a weight of 37.9 per cent in the overall Index of Industrial Production.

Core sector growth at 1.8 per cent in July, was the lowest in the last nine months. The previous lowest expansion was 0.4 per cent in October last year, according to government data released on Friday. For the April-July period, the output grew 3.2 per cent, compared with 6 per cent in the corresponding period of the previous year. While natural gas and crude oil output declined 13.5 per cent and 0.7 per cent respectively in the period under review, fertiliser output shrank 2.2 per cent.

Steel production slowed to 4.5 per cent from 16.5 per cent last year, and coal output dipped 2.1 per cent from 2.5 per cent year-on-year. Cement, petroleum refinery and electricity output also moderated significantly. Since the core sector has a weightage of close to 38 per cent in the IIP, any weakness in these numbers are reflected in overall industrial output data. Experts said the data underlines a weakness in industrial production going ahead.

The industrial sector has been hit by project delays and environmental clearances. High interest rates and rising raw material prices have further compounded the problem.