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High power production masks core-sector ills

High power production masks core-sector ills
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First Published: Thu, Mar 15 2007. 12 38 AM IST
Updated: Thu, Mar 15 2007. 12 38 AM IST
India’s infrastructure sector grew by 8.7% in January 2007, up from 8.5% in December 2006, and from 8.2% a year ago. The growth in the core index, a good indicator of the efforts of the government and the private sector to build infrastructure, was buoyed by higher power generation.
Production of electricity, which has the biggest weight of 102% in the index of industrial production, grew by 9.1% in January 2007, compared with 3.4% a year ago.
The core index is a composite index for six industries—crude petroleum, refinery products, coal, electricity, cement and finished steel.
Between April 2006 and January 2007, it grew by 8.4%, compared with 5.8% a year ago. Growth in power generation and consumption closely follows or leads that in the gross domestic product.The government expects GDP to rise 9.2% in 2006-07 and “the sustained growth in power as well as in industry as a whole shows we are closer to that goal,” said Devendra Pant, associate director, Fitch Ratings.
The high growth in power generation masks the slower growth in the production of construction materials. This is in keeping with supply-side constraints that have sent inflation soaring to well over 6%.
Coal production grew by 2.9% in January, compared with 6.7% last year; between April 2006 and January 2007, it grew by 4.5%, compared with 6.2% a year ago.
Cement production grew by only 6.8% in January, compared with 15.4% last year; between April 2006 and January 2007, it grew by 9.5% compared with 11.4% a year ago.
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First Published: Thu, Mar 15 2007. 12 38 AM IST
More Topics: Economy and Politics | Indicators |