For the first time in months,the infrastructure sector showed signs of recovery in terms of year-on-year growth in April this year. The infrastructure sector,which comprises 26.7 per cent of the index of industrial production (IIP),grew 4.3 per cent in April,compared with a 2.3 per cent growth in April last year.
Experts believe this resurgence is reflected in the impact of governments stimulus packages on the overall economy.
This could spell good news for overall industrial performance as well since growth in the infrastructure sector is a good indicator of the general trend in industrial production. The IIP figure will be released by the Central Statistical Organisation on June 12. Overall growth in the core sector in 2008-09 was 2.7 per cent,substantially lower than the 5.9 per cent growth in the previous fiscal.
However,of the six sectors,which constitute the infrastructure index,only three sectors cement,electricity and coal registered impressive growth over the previous year. Steel,on the other hand,only showed a slight recovery over last year while production in crude oil and petroleum refinery products fell from last year.
Cement,electricity and coal grew 11.7 per cent,6 per cent and 13.2 per cent respectively,compared to 7.5 per cent,1.4 per cent and 10.4 per cent respectively in the previous fiscal. Steel recovered from a fall of 0.6 per cent last year to a growth of 1.6 per cent this April. Production in crude oil and petroleum products,on the other hand,fell 3.1 per cent and 4.3 per cent,compared to respective growth rates of 1 per cent and 4.3 per cent last April.
The primary reason for the resurgence,especially in the cement and steel sectors,according to DK Joshi,principal economist at CRISIL,is increased government expenditure and its special focus on the construction sector.
As for whether this improvement will be reflected in the overall IIP figure as well,Joshi added that IIP is most definitely likely to be positive this month.