Recovery thickens: Core sector,excise kitty grow

On Friday,two sets of government data confirmed that industrial recovery was taking root. record 7.1 per cent year-on-year expansion in the output....

On Friday,two sets of government data confirmed that industrial recovery was taking root. record 7.1 per cent year-on-year expansion in the output of six core infrastructure industries and a 22.7 per cent month-on-month growth in excise duty collections.

Infrastructure sector growth was driven by double-digit increases in cement and coal output. Buoyed by this robust performance,economists expect positive news from the index of industrial production,almost a third of which is accounted for by the core sector.

The latest numbers are a marked improvement over the 2.1 per cent growth seen a year earlier,as well as the dismal 2.5 per cent increase seen in the previous month. In the five months ended August,the sector grew 4.8 per cent,against 3.3 per cent in the corresponding period last year.

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Aiding this improvement in the core sectors August performance was a base effectthe sector had lower output in the year-ago period. Nevertheless,barring crude oil production,all the other five segments witnessed growth in output.

Simultaneously,the rise in excise duty collections was led by improvements in sectors like sugar,which grew by around 16 per cent,petroleum products (4-5 per cent) and cigarettes,said Central Board of Excise & Customs chairman V Sridhar on the sidelines of a CII seminar on Friday.

Industry is clearly showing signs of revival… We are hopeful of meeting our target, Sridhar added. In Budget 2009-10,finance minister Pranab Mukherjee set this years indirect tax collection target at Rs 2.7 lakh crore. Figures released on Tuesday showed that advance corporate tax payments grew 14.7 per cent,to Rs 44,010 crore,in the second quarter of 2009-10.

Economists pointed out that the core sectors performance has fluctuated in the past couple of months,but that the underlying trend was positive. The growth in the core sector is because of government spending. But to ensure a sustainable growth rate,private spendingwhich is low at the momenthas to increase in the coming months, said Crisils DK Joshi.

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With an output of 16 million tonne,cement production grew a record 17.6 per cent in August. Electricity generation expanded 9.8 per cent,the most in 19 months,as factories needed more power during the month. As thermal power plants needed more coal,output from coal mines expanded 13 per cent.

Finished (carbon) steel production grew 3.7 per cent to almost 5 million tonne in August,the highest since March. Even petroleum production increased 3 per cent in August,also the best per- formance since March.