India’s six core infrastructure industries — crude oil, petroleum refinery products, coal, electricity, cement and finished steel — grew at a slower 5.2% in April compared to 7.5% in the same month of the previous year, rekindling the debate about an imminent industrial slowdown in the coming months.
These industries account for more than a quarter (26.7%) of India’s total industrial output. It grew by 7.4% in March.
The latest data came a day after official data showed that India’s GDP grew by 7.8% in the January-March quarter, the slowest in five quarters.
The manufacturing sector, which accounts for 80% of India’s industrial output, grew at 5.5% during the quarter, the slowest in 18 months.
Slower manufacturing sector growth will hurt corporate profitability and hurt employment prospects.
There are around 1.6 lakh registered factories in India employing more than 11.3 crore people.
Economists said inflation, which was 8.66% in April, is likely to create margin pressures on firms.
“Certain lead indicators such as the intermediate goods segment or auto sales have turned softer as well. We remain sceptical about the prospects of manufacturing and construction in the coming quarters as well,” said Siddhartha Sanyal, economist, Barclays Capital.
Both the government and Reserve Bank of India have acknowledged that underlying inflationary pressures have accentuated, even as risks to growth are emerging.