Infrastructure output growth dips to 17-month low

New Delhi: India’s infrastructure output growth dipped to a 17-month low in February at 1.4 per cent, pulled down by contraction in the production of steel, fertilisers and refinery products.

The infrastructure sector, which comprises of coal, crude oil, oil refining, natural gas, steel, cement, electricity and fertilisers, had grown by 1.8 per cent in January. Infrastructure sector comprises nearly 38 per cent of the weight of items included in the Index of Industrial Production (IIP). In February the steel sector contracted by 4.4 per cent as against a positive growth of 1.6 per cent in January. It had grown by 11.5 per cent in February 2014.

The fertiliser sector growth contracted by 0.4 per cent as compared to a positive growth of 7 per cent in January. The refinery production also contracted by one per cent in February against a growth of 5 per cent in January. On a positive note electricity grew by 5.2 per cent in February against 2.7 in January. The coal production in February shot up to 11.6 per cent.

“The slide in core sector growth for the second month in a row as well as the contraction displayed by five of the eight core sector constituents in February 2015 is disappointing,” said Aditi Nayar, senior economist, at rating agency ICRA.

She said that the sharp uptick in growth of coal production and relatively moderate improvements in the performance of electricity and coal were inadequate to stem a decline in core sector growth in February 2015 as compared to the previous month.

“We would expect the core performance to meaningfully pick up during the next fiscal when the government’s infrastructure push comes to fruition,” informed Anis Chakravarty, senior director, Deloitte India.