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| Core sector records fastest growth in four months |
| BS Reporter / New Delhi Mar 28, 2009, 00:44 IST |
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Expands 2.2 per cent in February.
The index of six core industries, which captures the performance of the infrastructure sector, grew at the fastest pace in four months in February this year because of higher output from petroleum refinery and steel sectors.
The index expanded 2.2 per cent in February 2009, compared with 7 per cent increase in the corresponding month last year. Between November 2008 and January 2009, the period when global crisis impacted the most, this index recorded month-on-month decline in growth rate.
“The improvement in core sector in February, as compared with the earlier months, cannot be termed as a trend. Overall weakness remains the economy,” said DK Joshi, principal economist of credit rating agency Crisil Ltd.
He predicts the Index of Industrial Production (IIP), where these infrastructure sectors have more than a fourth weight in the index, would post marginal growth in February, as against contraction seen in the previous month.
Only one sector — crude oil — remained in the negative territory. Electricity generation also remained flat. But the other four sectors, including steel, cement and coal, posted better than expected performance.
According to Cabinet Secretary KM Chandrasekhar, the fiscal stimulus packages have had a positive impact on the infrastructure sectors. “The Infrastructure sector is responding to the stimulus packages. The expenditure this year is whole lot better,” he said at a national conference organised by Confederation of Indian Industry here.
Cement output growth in the month under consideration remained lower than that of the same month last year, but was almost of the same level that was seen in January 2009. This was because of high levels of production growth in the year ago month.
Finished (carbon) steel, used in many infrastructure industries, posted better production growth than the year ago month, as factories produced more. Production of this metal product had shrunk for three consecutive months ending December 2008, as demand in the real estate and infrastructure sector fell.
Coal output from mines remained moderate in the month under consideration. This was mostly due to a high base effect as production from coal mines recorded double digit growth in the year ago month. Nevertheless, output from coal mines have been on a declining trend since October 2008, which could be due to power plants using greater amount of imported coal.
Electricity generation growth almost remained flat during February. Experts said that a high base effect, combined with high deficit in peak hours lead to lesser growth in the sector.
Output from Indian oil fields remained dismal as well, indicating lesser yields because of low output from ONGC’s flagship oil field, Bombay High. Growth in petroleum refinery output during the month under consideration also was marginal.
Going forward, Soumendra Dashm, chief economist, CARE Ratings, said: “In March, I expect all the six segments of the core sector to post growth.”
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