Infra sectors grow at snail's pace in June, may impact IIP

The infrastructure sector’s output growth in June was a near-static 0.1 per cent against 7.9 per cent in June 2012, according to data issued by the ministry of commerce and industry.  This may pull down industrial production in June since the core sector has almost 38 per cent weight in the Index of Industrial Production (IIP).   Industrial production contracted 1.6 per cent in May.  

The core sector, which includes eight infrastructure industries, grew at a sluggish pace, with contraction in half the sectors — coal, crude oil, natural gas and electricity.

Last month, when the core sector grew at a slow 2.3 per cent, industrial output contracted 1.6 per cent. Among all the sectors, fertiliser grew at the sharpest pace in June, of 11.3 per cent against a contraction of 11.7 per cent in the corresponding month last year. Electricity, which saw the steepest rise in output the previous month, contracted by 1.6 per cent in June against 10.32 per cent in June 2012.

Steel production grew 3.4 per cent in June against 4.1 per cent in the corresponding month of 2012. Cement output grew 2.3 per cent against 9.5 per cent and refinery products witnessed an upside by 2.3 per cent against 26.2 per cent.

Coal and crude oil continued their contraction for a second straight month. These saw an output decline of three per cent and 0.4 per cent in June against 8.4 per cent and 5.22 per cent in June 2012, respectively. Natural gas fell 16.7 per cent.

As a result, the figure for the first quarter does not look promising, as  all the core sectors grew at a slower pace than in the first quarter of 2012-13. In this year’s June quarter, the first of 2013-14, the core sector grew 1.6 per cent against 6.9 per cent in the first quarter of 2012-13.