Core sector growth takes a beating

With supply constraints peaking, growth in infrastructure is turning out to be the hardest hit. Estimates indicated by the Index of Industrial Production IIP reveal that the sector8217;s growth fell to 5.3 per cent in November 2007, compared to 9.6 per cent in the same period last year.

Growth in infrastructure has been falling every month since April. Impacted by sluggish increase in output since September, the cumulative expansion for April-November of the current fiscal declined to 6 per cent, as compared to 8.9 per cent in the corresponding months of FY07. Crude petroleum, petroleum refinery products, coal, electricity, cement and finished carbon steel form the core infrastructure industries group, accounting for over 26 per cent of the total weightage of IIP.

Crude petroleum was the worst performer, clocking a dismal growth of 0.3 per cent in November compared to a robust 9.8 per cent last year. Petroleum refinery, too, managed 5.2 per cent growth compared to a healthy 16.4 per cent growth last year.

Electricity generation also dipped to 5.8 per cent from 8.8 per cent, while cement production grew by 4.5 per cent, declining from 11.8 per cent. Finished carbon steel saw growth of 5.8 per cent in November 2007 as compared to 9.3 per cent last year.

For the April-November period of 2007-08, all six industries registered a decline in growth. Coal was one of the few industries to emerge positively. Production grew by 7.7 per cent, up from 4.9 per cent in November 2006.