New Delhi: Hit by rising interest costs, the growth in six core industries -- power, cement, coal, steel, crude oil and petroleum products, slipped to 3.5% in May as against 7.8% a year ago.
According to official data released today, the growth of these sectors, which contributes 26.7% in the industrial production, declined to 3.5% during first two months of the current fiscal from 6.9% in the same period last year.
“The slowdown in the infrastructure sector would have adverse impact on the industrial growth,” credit rating agency Crisil’s Principal Economist D K Joshi said.
Joshi further added though inflation is still the biggest worry for the economy, but with the progress on signing of civil nuclear deal, the power sector may benefit that will have an overall positive impact on manufacturing sector.
The growth in power generation, with a weigh of 10.17% in the index of industrial production (IIP), declined to 2% in May this year as against 9.3% in a year-ago period.
In April-May, the power sector witnessed growth of 1.7%, compared to 9% in the first two months last fiscal.
However, coal, finished steel and cement sectors registered a growth of 8.3%, 5.2% and 3.8% in May respectively, against 0.5%, 8.4% and 9.9%, respectively.
Analysts said the infrastructure sector growth has slowed down partly due to rise in cost of raw material, borrowings and fall in demand from the construction and other sectors. It could lead to fall in growth of industrial sector apart from overall GDP growth.