Core sector growth slows to 0.5% in Jan | business | Hindustan Times
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Core sector growth slows to 0.5% in Jan

India's eight core infrastructure sectors grew by a near flat 0.5% in January, confirming fears of a crippling industrial slowdown as companies, squeezed by costly borrowing and input costs, deferred planned investments. HT reports. Worrisome start

business Updated: Feb 28, 2012 21:42 IST
HT Correspondent

India's eight core infrastructure sectors grew by a near flat 0.5% in January, confirming fears of a crippling industrial slowdown as companies, squeezed by costly borrowing and input costs, deferred planned investments.


Pulled down by contraction in output of crude oil, natural gas, refinery products and steel, the eight infrastructure industries, which have a combined weight of 38% in the overall Index of Industrial Production (IIP), remained weak during the first month of 2012.

Infrastructure industries' output had grown by 4.6% in December and 6.4% in January last year.

The contraction in domestic crude oil output and the persistent rise in international crude prices has the government worried, which is struggling to contain rising deficit to fund flagship programmes in its budget for 2012-13.

Finance minister Pranab Mukherjee on Tuesday said it is too early to gauge the impact of high crude prices on the economy. http://www.hindustantimes.com/Images/HTEditImages/Images/29_feb_biz2.jpg

"Rise in prices of crude, of course, is disturbing fact, no doubt. It will be too premature to say what would be the adverse impact on what sector," Mukherjee said.

Output in only four infrastructure industries — electricity, cement, coal and fertiliser — recorded a positive growth in January 2012, raising the spectre of an across-the-board industrial slowdown. India's industrial output growth moderated to 1.8% in December from 5.9% in November.

Analysts said that mining output has contracted due to a fall in oil and gas production.

The contraction in output of four key infrastructure sectors perhaps is a pointer that capital goods output continue to remain weak — it contracted by -16.5% in December — mirroring investment demand.

Amid signs of a sputtering economy, the industry rachetted up their demand for cheaper interest rates and friendlier fiscal policies to boost growth.