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Infrastructure growth dips in July

Growth down to 6.3 per cent in July from 10.9 per cent in the same month last year, reports Gaurav Choudhury.

business Updated: Sep 13, 2007 21:34 IST
Gaurav Choudhury

More disappointment was in store for the Indian economy, with the infrastructure sector growing at a slower pace in July raising concerns about possible adverse impact on the growth process.

The growth of six core infrastructure sectors, which have a combined weight of 26.7 per cent in the Index of Industrial Production (IIP) dipped to 6.3 per cent in July from 10.9 per cent in the same month of the previous year.

The latest figures came a day after the official data showed that industrial output, as measured by the IIP fell to 7.1 per cent in July this year from a sizzling 13.2 per cent in the same month of the previous year. All the six sectors — cement, steel, coal, power, crude oil and petroleum refining — clocked a slower growth during July this year.

Crude petroleum production actually fell by 0.9 per cent in July as against 4.10 per cent. Coal production grew by a meagre 1.1 per cent from 9.1 per cent in the same month of the previous year. Growth in finished steel also fell significantly to 7.9 per cent from 15 per cent.

Petroleum refinery production grew by 4.6 per cent in July this year from a robust 12.6 per cent in the same month of the previous year. Cement production growth rate fell to 9 per cent in July 2007 from 14 per cent in the same month of 2006.

Electricity generation clocked a growth of 7.5 per cent, down from 8.9 per cent in July 2006.

Economists and industry captains felt that slower growth was largely because of monetary tightening and an appreciating rupee. "The moderation in industrial activity is owing to the impact of tight monetary stance adopted by the central bank," Gunjan Gulati of JP Morgan India Private Limited said.

FICCI President Habil Khorakiwala said the deceleration of infrastructure sectors in July this year would act as a constraint on the overall growth of the economy. "Infrastructure bottlenecks have been an impediment on the operations of the Indian industry. A further deceleration will create fresh constraints. It will be imperative to kick start the growth process for the economy to maintain a high trajectory," he said.

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