India's infrastructure sector grew 5.1 per cent in September 2008, the fastest pace in the current financial year, helped by higher coal and cement production. Though lower than 5.8 per cent growth in September 2007, it is higher than last month’s 2.7 per cent.
The Bombay Stock Exchange bellwether Sensex gained 230 points in a choppy trade today, ending a two-day fall, after the government put out the numbers. (Rate cuts announced by European banks too improved the market sentiment.)
This could have a positive impact on the overall industrial production index for the month, which had nosedived to 1.3 per cent in August. The six core industries have a 26.7 per cent weight in the Index of Industrial Production (IIP).
Data released by the Commerce and Industry Ministry today showed that in the April to September period, the core sector (crude oil, petroleum refinery products, coal, electricity, cement and finished carbon steel) grew 3.9 per cent, as against 6.9 per cent in the same period last year.
The expansion in the index during September was contributed by coal, as miners beefed up operations after the monsoon rains got over, and cement. “One could see a lower base in September last year contributing towards cement production growth in the month,” Axis Bank Vice-president Saugata Bhattacharya added.
On the other hand, growth in electricity generation remained flat in the month. Crude oil production growth dipped in September, as the output from existing oil fields fell. Petroleum product production growth too as refiners processed lesser crude.
Growth in finished carbon steel production in September was lower than the same month last year. Steel companies are cutting down production, as prices of the metal have crashed.
Unlike the stock markets, industry representatives said this was another indication of industrial slowdown. “It is now imperative that boosting growth becomes the focus of all policy actions,” Federation of Indian Chambers of Commerce and Industry Secretary General Amit Mitra.
