Infrastructure takes a big hit in April 2005

The five sectors that have registered a fall include crude petroleum, petroleum refinery products, electricity, cement and finished steel.

Coal was the only sector that registered an increase in the growth rate up by 1 per cent for the month of April 2005 as compared to the previous year. This, according to economists, is good news.

It needs to be mentioned that these six sectors have a combined weight of 26.68 per cent in the index of industrial production.

While economists did not read too much into the fall in the growth rate of cement during the month of April 2005 vis-a-vis April 2004, they pointed out that the low growth rate in power generation was a matter of concern and did impact the overall index. They however also clarified that April 2005 was better the previous few months.

The electricity sector, which alone has a total weightage of 10.17 per cent (or close to 50 per cent of the combined weight) registered a meagre growth of 2.9 per cent in April 2005 as against a growth of 10.5 per cent during the same month last year.

April was the month where states like Maharashtra, one of the largest consumers of electricity, started experiencing long spells of load shedding. Industry experts believe that the decline in the growth of electricity production was partly on account of the fuel shortages and partly on account of under utilisation of capacity.

What is of interest is that the fall in growth rates was the highest in the case of petroleum refinery products where the growth rates dipped by as much as 21 per cent down to (-) 7.9 per cent during April 2005. This sector however carries a weight of only 2 per cent. Economists associated with the government explained that this fall was largely on account of some big refineries operating below capacity coupled with fall in the domestic demand for diesel. But crude petroleum, where the growth rate stood at (-) 0.4 per cent in April 2005 as against a growth of 9.4 per cent last year, has a weight of 4.17 per cent. This according to the same economist is not too alarming a fact because crude oil production follows a step function and April 2004 was also a good month as it incorporated production from new oil fields.