Core sector expands 5.3% in November

The country’s infrastructure sector accelerated by 5.3 per cent in November, backed primarily by growth in steel and cement production in the month.

The six core sectors, which contribute 26.7 per cent to the overall Index for Industrial Production (IIP), had grown 0.8 per cent in the corresponding month of 2008. The growth in October this year was revised upwards to 3.8 per cent from an earlier estimate of 3.5 per cent.

“The figures indicate that the growth is skewed, as it is still in favour of sectors that have benefitted from stimulus measures like construction and other allied sectors. Therefore, even as the data are tilted towards positive growth, we should take it with a pinch of salt because it is not broad based,” said Rupa Rege Nitsure, chief economist, Bank of Baroda.

On a sequential basis, core sector growth accelerated after two consecutive months of deceleration in rate. On a cumulative basis, core sector grew 4.6 per cent in the current financial year (April-November), against 3.5 per cent in the corresponding period last year.

Analysts further said the Reserve bank of India (RBI) would take major monetary policy decisions as credit demand picks up. Most expect that the third quarter GDP growth rate would provide a clearer picture.

Finished (carbon) steel production grew at the highest rate — 11.7 per cent — during the month, against a decline of 6.3 per cent in the corresponding period of 2008. Cement production also picked up to post a growth rate of 9 per cent in November, marginally up from 8.7 per cent in the month in 2008.

Production of petroleum refinery products also grew by 4.9 per cent on a year on year basis, as against a contraction of 1.1 per cent in the year ago period. Crude oil production contracted by 1.6 per cent, as compared to a modest growth of 0.5 per cent in the corresponding period last year. Coal and electricity registered a growth of 3.3 per cent and 1.8 per cent, respectively, marginally lower than 9.7 per cent and 2.6 per cent, in the corresponding period the previous year.