September core sector growth slows to 6%

The slowdown in the country's industrial production this September was reflected in the six core infrastructure industries' index, which grew 6 per cent as against 10.6 per cent in the year-ago period.

Apart from coal, the five other sectors "" crude petroleum, petroleum refinery products, electricity, cement and finished (carbon) steel "" recorded a dip in production, pulling down the index.

"The September figures for the core infrastructure index are in line with the Index of Industrial Production (IIP), which posted a growth of only 6.4 per cent. Usually, the core infrastructure index numbers diverge from the IIP. This time it was not so," said Samiran Chakraborty, chief economist, ICICI Bank. 
 

COOLING DOWN
Sector	Sep-06 (% growth)	Sep-07 (% growth)	Apr-Sep 06 (% growth)	Apr-Sep 07 (% growth)
Crude  Petroleum	9.4	-0.7	4.1	0.7
Petro  Products	13.4	6.9	12.3	9.8
Coal	-0.8	6.2	5.3	2.8
Electricity	11.5	4.3	6.7	7.6
Cement	16.5	5	10.6	8.3
Finished  Steel	10.6	10.3	12.2	6.6
Overall	10.6	6.0	8.7	6.6

Analysts attributed the industrial slowdown to a dip in consumer demand, an appreciating rupee and high interest rates, which were adversely impacting the crucial manufacturing sector.

Data released by the Department of Industrial Policy and Production (DIPP) showed that in the April-September period, the index rose by 6.6 per cent against 8.7 per cent in the year-ago period.

Significantly, production growth in the six core sectors during the April-September period of 2007-08 was lower than in the previous year. However, analysts said there was nothing to worry.

"When current monetary conditions, like high interest rates and an appreciating rupee, are taken into account, it seems to be putting a gradual cooling pressure on the economy. It is a soft-landing scenario. No alarm bells are ringing now," said Chakraborty.

Crude oil production declined 0.7 per cent against a 9.4 per cent growth a year ago. Refinery output dropped to 6.9 per cent as against 13.4 per cent in the same month last year.

The only consolation came from the coal sector, which increased production by 6.2 per cent. It had shown a 0.8 per cent decline in the year-ago period. Electricity production grew 4.3 per cent as against 11.5 per cent in the corresponding month of the previous year.

Cement production in September also slowed to 5 per cent, compared with 16.5 per cent in the year-ago period. Finished (carbon) steel production growth slowed marginally with an increase of 10.3 per cent this September as against 10.6 per cent a year ago.