Source: The Economic Times, Sept 01, 2016
NEW DELHI: India’s infrastructure sector growth moderated in July from the month before, marking a slow start to the second quarter of the fiscal after a moderate first quarter.
The core sector index, which measures output of eight infrastructure sectors, was up 3.2% in July compared with a 5.2% rise in June, data released by the commerce and industry ministry on Wednesday showed. These sectors have a 38% weight in the Index of Industrial Production (IIP), suggesting a weaker industrial growth in July. The IIP numbers for July will be released on September 12.
“The slowdown in core sector growth is unsurprising in light of the moderation in growth of coal output and sharp decline in expansion of electricity generation, despite the boost from the double-digit growth in refinery production,” said Aditi Nayar, senior economist at credit rating agency ICRA. The economy grew 7.1% in the first quarter ended June, down from 7.9% growth in fourth quarter of FY16.
However, the fiscal so far has been better than last year. April-July core sector growth is at 4.9% compared with 2.2% at same point last year. The slowdown in July was due to a broad-based moderation except for refinery output that rose at 13.7%.
Coal output growth fell to 5.1% from 12% in June while cement production rose only 1.4% in July compared with 10.3% rise in June, both impacted by the monsoon rains. Crude oil and steel production declined in July by 1.8% and 0.5%, respectively.
Natural gas production increased after four months of decline and was up 3.3% in the month. Electricity generation rose 1.6%, its slowest in eight months. “This is a disappointing number as far as the momentum is concerned. Electricity has been dragged by thermal and hydel power generation,” said Yes Bank chief economist Shubhada Rao.