Core sector grows by 4.5% in Feb

Six core infrastructure industries grew at 4.5 per cent in February against a meagre 1.9 per cent during the corresponding month last year, primarily due to increased output in electricity (7.3 per cent). The core sector had grown by a robust 9.5 per cent in January 2010.

The month on month deceleration in the growth rate is expected to moderate the overall industrial growth rate measured by the Index of Industrial Production (IIP), but is expected to continue at a healthy double digit level.

“Given these numbers, I think the IIP figures would come down and would be in the range of 10-11 per cent in the coming months,” said D K Joshi, principal economist of research and ratings firm Crisil Indian Limited.

The six infrastructure sectors — crude, petroleum refinery products, coal, electricity, cement and finished steel — that constitute 26.68 per cent in IIP, recorded a growth of 5.3 per cent in the period April-February 2009-10, as against 2.9 per cent in the same period last year.

A healthy growth in industry output with high inflationary expectations create ground for further monetary tightening measures by the Reserve Bank of India in fourth quarter monetary policy review on April 20.

While power generation grew by 7.3 per cent against 0.6 per cent during a year ago, crude output and coal production registered a growth of 4 per cent and 6.8 per cent respectively.