Infra growth down to 2.3% in Sep on rising interest, cost

With rising input costs and high interest rates, growth in eight key infrastructure sectors slowed down to 2.3% in September from 3.3% a year ago.

Coal, natural gas and fertiliser showed decline in output raising concerns for the industry and government.

The numbers were discouraging even compared to August when these sectors grew by 3.7%.

The coal was the worst performer recording a huge negative trend of 17.8%. Natural gas too showed a decline in production by 6.4% while fertilisers were down 2.1%, according to official data released today.

Heavy rains in coal mining areas and strike by workers in Coal India are stated to be among the main reasons for downfall in coal production.

The decline in growth was also witnessed for the cumulative first half of the current fiscal with April-September displaying an expansion of 4.9% against 5.6% in the corresponding period last year.

Cement was unimpressive, expanding by a mere 0.9% and crude oil by just 0.1%.

Electricity, however, witnessed 8.9% growth in generation, though it was lower than 9.4% in August.

Similar scenario was witnessed in steel which grew by 6.6%, although its expansion was slower than 8% in August. Refinery products managed a jump of 4.4%.

The dismal performance of the infrastructure sectors with a weightage of 37.90% in the overall industrial production is likely to weigh on the factory output numbers for September, scheduled to be released on November 12.

The industrial sector has been witnessing a slowdown under the combined impact of near double-digit inflation and rising cost of borrowing.

The Reserve Bank has raised interest rates by 375 basis points since March 2010 to rein in inflation.