The country’s infrastructure sector output grew by an impressive 7 per cent in October, compared to 3.9 per cent in the same month last year, indicating a positive signal for the Index of Industrial Production (IIP) for October, likely to be released next month.
The six core industries — crude oil, petroleum refinery products, coal, electricity, cement and finished steel — grew by 2.7 per cent in September.
The six industries have a weight of 26.7 per cent in IIP.
The growth in October was propelled by a robust rise in cement production, crude oil and electricity generation which rose by 16.8 per cent, 13.7 per cent and 8.4 per cent, respectively, compared to 5.3 per cent, (-) 2.1 per cent and 4.4 per cent in the same month in last financial year.
The April-October cumulative performance remained unchanged at 4.5 per cent from the previous year, according to data released by the Ministry of Commerce and Industry today.
“The core sector had always been very volatile. However, the coal and petroleum products remain areas of concern. These areas should rise to sustain the growth in other sectors. But the rise would definitely bear a positive impact on October’s IIP growth,” said D K Joshi, principal economist, Crisil.
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Petroleum refinery products showed a deceleration of 4.8 per cent, while coal grew merely by 0.8 per cent in October. Electricity generation increased to 8.4 per cent in October against 4.4 per cent in the comparable month last year. Output of finished steel, too, improved at 6.2 per cent from 2.5 per cent in October 2009.
| CORE COMPETENT Growth of six infrastructure industries (in %) | ||||
| Oct 2009 | Oct 2010 | Apr-Oct 2009-10 | Apr-Oct 2010-11 | |
| Crude oil | (-)2.1 | 13.7 | (-)1.3 | 10.7 |
| Petroleum refinery products | 7.2 | (-)4.8 | (-)2.0 | 1.4 |
| Coal | 6.8 | 0.8 | 11.4 | (-)0.1 |
| Electricity | 4.4 | 8.4 | 6.1 | 4.7 |
| Cement | 5.3 | 16.8 | 11.3 | 6.3 |
| Finished (carbon) steel | 2.5 | 6.2 | 1.8 | 4.2 |
| Overall | 3.9 | 7.0 | 4.5 | 4.5 |
| Source: Ministry of Commerce and Industry | ||||
During the April-October period, crude oil sector registered 10.7 per cent growth against a contraction of 1.3 per cent in the same period in 2009-10. However, coal output in the first seven months of 2010-11 contracted by 0.1 per cent from 11.4 per cent growth in April-October 2009-10.
“Growth in the core sectors for the last few months had been pretty low, so a rise of 7 per cent comes as a pleasant surprise. This is a reflection of the fact that the infrastructure sector has at least picked up. However, it is difficult to read long-term trends from this rise,” said Deepali Bhargava, economist at ING Vysya Bank.
Cumulatively, electricity generation and cement slowed to 4.7 per cent and 6.3 per cent, respectively, in April-October from 6.1 per cent and 11.3 per cent, in the same period last year.
Petroleum refinery output in the period expanded by 1.4 per cent and finished steel by 4.2 per cent.