India’s core sector growth has slowed down again in July after improving consistently through the first quarter of the current fiscal. The group of six infrastructure industries posted a poor growth of 1.8% in the month of July compared with 2.8% in May and 6.5% in June. Growth in the corresponding month last year was 5.1%.
Main culprits for pulling the growth down were crude and steel. Crude oil production dipped by 0.4% in July while steel output expanded by only 1.2% against 6% a year ago. On the other hand, coal output expanded by 9.7% against 5.5% last year, electricity by 3.3% compared with 4.5% and cement by 10.6% against 5.5% the year ago period.
Cumulative growth during the April-July period now stands at 4%, compared with 3.5% in the same period last year. However, a decline in infra growth may also pull down the July index of industrial output (IIP). The infrastructure sector consisting of petroleum refinery, crude oil, coal, electricity, cement and finished steel accounts for 26.7% of India’s overall industrial output.
Economists have been hoping that faster than expected recovery in the industrial space will help the economy mitigate the impact of poor monsoon to some extent. However, in case industrial recovery too slows down, it may, coupled with patchy rains, seriously bring down the growth for current fiscal