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More slump: Infrastructure growth below 2%

business Updated: Mar 06, 2009 23:20 IST
HT Correspondent
HT Correspondent
Hindustan Times
More slump: Infrastructure growth below 2%

The country’s infrastructure output grew by a lower 1.4 per cent in January from a year earlier, mirroring the slowdown in the broader economy.

Output of the six infrastructure sectors—crude oil, refinery products, steel, cement, coal and electricity—account for 26.68 per cent of the country’s industrial output.

It grew by 3.6 per cent in January last year, latest official data released on Friday showed.

In recent days, there has been a raft of weaker-than-expected economic data, including the sharp slowdown in real GDP growth in the third quarter to 5.3 per cent and contraction in export earnings for the four consecutive months.

According to the RBI, which recently slashed the benchmark repo rate by 0.5 percentage points, the impact of the global downturn on India “has turned out to be deeper and wider than anticipated earlier.”

The low growth in the infrastructure sectors was mainly due to lesser production of crude oil, which shrunk 8.1 per cent in the month, against 0.2 per cent contraction in January 2008.

Petroleum products production in January also contracted 2.6 per cent, as compared to 5.4 per cent increase in the year ago month.

Cement production that increased 8.3 per cent as against 5.6 per cent in the same month of last year was the only silver lining.

In the April to January period of 2008-09, the core infrastructure index expanded 3.2 per cent over 5.7 per cent in the same period of the previous year.

Experts expected the slowdown to continue for a few more months.

“In our view, the sharp slowdown in India’s economic growth will continue into the next few quarters,” said Sonal Varma of Nomura Financial Advisory and Securities.