NEW DELHI: The eight infrastructure sectors that constitute 40.27% of the index of industrial production (IIP) recovered to post a growth rate of 4.7% in March, marking a five-month high as production of steel and cement too grew at a robust pace.
For the full year of 2018-19, however, the core sector data grew at a slower pace of 4.3% against 4.8% in the previous year.
During March, growth in the output of steel (6.7%) and cement (15.7%) picked up, reflecting improvement in construction activities. Refinery products also recovered from the negative zone in the previous month to grow at 4.3% in March, even though crude output (-6.2%) continued to contract.
Devendra Kumar Pant, chief economist at India Ratings Ltd said government capex spending seems to have helped the cement and steel sectors. “Though some segments of core sector are doing well, core sector at an aggregate level is still falling short of expectation and will likely remain so even in coming months. However, impetus to core segment may come once the new government comes to power later in May," he added.
The core segments that have performed erratically in 2018-19 include crude oil (-4.1%), natural gas (0.8%) and fertiliser (0.3%) while electricity, which is plagued by non-performing assets, grew at a moderate pace (5.1%) during the year.
In February, India’s factory output growth dropped to a 20-month low in a worrying sign for the country’s growth prospects, while retail inflation accelerated in March but remained within the central bank’s comfort zone, creating room for more interest rate cuts in June.
The Reserve Bank of India cut the policy rate by 25 basis points for the second consecutive time in April as concerns over growth loomed larger than those surrounding inflation. The Indian economy grew 6.6% in the December quarter, the slowest in five quarters, prompting the Central Statistics Office to trim its 2018-19 forecast to 7% in February from the 7.2% estimated in the previous month.
India Ratings on Tuesday reduced its economic growth projection for 2019-20 to 7.3% from 7.5% estimated earlier, in sync with the latest projection by the International Monetary Fund.