At 3.4%,June core sector growth at lowest pace in 10 months

Written by ENS Economic Bureau | New Delhi | Published:July 29, 2010 3:26 am

Infrastructure sectors grew by just 3.4 per cent in June,the worst performance of the core sectors in 10 months thanks to sliding output in coal,electricity and cement. The poor performance in annual production is further indication that growth has likely peaked with year-on-year base effect fading.

Output of crude oil,petroleum refinery products and steel,which make up the six core infrastructure industries,were marginally higher or flat,according to commerce ministry data. The six industries account for around 27 per cent of factory output measured by the Index of Industrial Production (IIP).

The last time growth was slower than this was in July 2008 when it expanded by 3.2 per cent.

In May this year,the sector had grown by 5 per cent and in June 2009,growth was 6.3 per cent. Finance secretary Ashok Chawla said earlier this month,industrial output was expected to keep growing at a double digit clip in the current fiscal year to March 2011.

Crude oil production grew by 6.8 per cent compared to 4 per cent in June 2009,serving as the only sector to show growth over the last year,continuing its seven month run on year-to-year improvements. However,actual output fell between May and June by 6,000 tonnes,according to the ministry of petroleum and natural gas.

Year-on-year growth in coal continued to suffer,posting just 0.9 per cent growth compared to June 2009’s 15.2 per cent growth. So far,cumulative growth for the fiscal stands at -0.4 per cent as monthly output has taken a massive dip falling to 39.75 million tonnes this month since March’s two-year high of 60.9 million tonnes,according to the ministry of coal.

Electricity generation failed to grow on a year-to-year basis for the first time in 11 months,reaching just 3.4 per cent compared to 7.7 per cent in July 2009. Although the output of 65,000 million kilowatt hours would have been average for 2009,the sector has been falling since reaching an all time high of 70,000 million Kwh in March,according to the ministry of power.

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