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Business News/ Politics / News/  Jan infrastructure output rises, boosts outlook
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Jan infrastructure output rises, boosts outlook

Jan infrastructure output rises, boosts outlook

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New Delhi: India’s infrastructure sector output growth picked up in January, indicating industrial growth could be better in fiscal fourth quarter ending March compared with the three months to December.

Output of six key industries expanded 7.1% in January, faster than a downwardly revised growth of 6.1% in December, government data showed on Tuesday, but slower than the 9.1% growth during the corresponding period last year.

“The infrastructure growth in January indicates that industrial output growth could be better in the fourth quarter, around 5%, though still affected by capacity constraints," said N.R. Bhanumurthy, an economist at National Institute of Public Finance and Policy, a Delhi-based think-tank.

Industrial output growth had slowed to an annual 1.6% in December, keeping April-December expansion to a steady 8.6%.

India’s manufacturing sector expanded at its fastest clip in three months in February as more new orders poured in, but input prices rose at a record pace, a survey showed on Tuesday.

In the first 10 months of the current financial year, infrastructure output rose 5.6%, compared with 5.5% growth in the year-ago period.

Crude oil and petroleum refinery products output grew 10.8% and 8.7% respectively in January from a year earlier. Finished steel output rose more than 8%, but coal production contracted by 1.2%, the data showed.

The electricity output grew 9.3% in January from 6.4% a year earlier, while the cement output growth fell to 1.8% from 12.4%.

The bottlenecks in infrastructure sector, which accounts for 26.7% of industrial output, are considered a drag on economic growth by 1-2 percentage points and for accelerating inflation.

India’s economy grew a slower-than-expected 8.2% in the December quarter from a year earlier, government data on Monday showed. Asia’s third-largest economy is on track to expand 8.6% in the current fiscal year.

In the annual budget for 2011/12, finance minister Pranab Mukherjee on Monday raised funds by 23% for infrastructure sector and increased foreign institutional investment limit in infrastructure bonds to $25 billion from $5 billion.

India expects to invest about $500 billion in infrastructure, mainly in power, telecoms, roads, railways and oil pipelines, in five years to the end of March 2012 to lift growth to near double-digit levels.

It also aims to double spending on infrastructure to $1 trillion in its next five-year plan, which runs from April 2012.

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Published: 01 Mar 2011, 12:23 PM IST
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