India’s eight infrastructure sectors contracted at the sharpest pace in six months in February, reversing two months of positive growth.
Data released by the industry department showed core sector shrank 4.6% in February underlining the uncertain path to recovery in Asia’s third largest economy amid a second wave of coronavirus infection.
During the month, output contracted in all eight sectors, including steel (-1.8%) and electricity (-0.2%) after recording growth in the last five months. Refinery products (-10.9%) recorded the sharpest decline in output followed by cement (-5.5%).
Among other sectors, coal (-4.4%), crude oil (-3.2%), natural gas (-1%), fertilizers (-3.7%) also recorded sharp contraction during the month.
Aditi Nayar, principal economist at ICRA Ltd said the de-growth in each of the eight constituents notwithstanding, an unfavourable base effect is another reminder that the phase of rapid recovery seen until December last year is clearly behind the country.
“The lead indicators such as the core sector, auto output and non oil exports have revealed a decidedly mixed trend for February. Based on the available data, we expect the contraction in IIP to deepen to 2-3% in February 2021 from 1.6% in January 2021. Given the sharp base effect, we expect the core sector output to expand by 9-11% in March 2021, which should result in a modest growth of around 2% in Q4FY21,” she added.