The new fiscal’s first set of numbers for the industry has been discouraging. Growth in the six-sector infrastructure index levelled off at 7.4 per cent in April 2007 against 7.3 per cent growth in April 2006, says official data released today. It grew 10 per cent in March 2007. But experts say it is too early to look for a slowdown in the economy. The overall performance of the index that has a combined weight of 26.7 per cent in the Index of Industrial Production (IIP) was hurt by the weak performance of cement, coal and finished steel. According to Subir Gokarn of Crisil, the cumulative effect of the rise in interest rates will show up at some point. He said sectors like auto and construction could bear the brunt. Also, he felt the growth rate for industry would be slower than last year. Cement production seems to have been hit by the ruckus in the Budget about its pricing structure. The sector registered a growth of only 5.1 per cent in April 2007 compared with a heady 12.2 per cent rate in April 2006. In fiscal 2006-07, cement production has grown 9.1 per cent. It rose 12.4 per cent in 2005-06. The other star sector, finished steel, also registered growth of only 8.4 per cent in April 2007, compared to 10.1 per cent last year. Both steel and cement industries have been told by the government that they were keeping prices high to benefit from heavy demand from the construction sector as the economy shoots at over 9 per cent. The industries have denied the charge. The annual growth of the steel sector in 2006-07 was 8.6 per cent against 6.2 per cent in the year before as it took advantage of the buoyant conditions overseas. The key raw material for these sectors, coal production, also registered measly growth of 0.5 per cent in April 2007, compared to a growth rate 3.4 per cent in April 2006. The good news comes from the electricity sector. Electricity generation registered a growth of 8.7 per cent in April 2007, compared to a growth rate of 5.9 per cent in April 2006. Electricity generation grew by 7.3 per cent (provisional) during April-March 2006-07 compared to 5.1 per cent in the same period of 2005-06. Similarly, crude petroleum production registered a growth of 1.4 per cent in April 2007 compared to a negative growth rate of 1.8 per cent in April 2006.
