Core sector growth slows

India’s key infrastructure sector rose 3.1% in December, much slower than the previous month’s upwardly revised 6.7%, pointing to sluggishness in the industrial sector. Data released showed the output in eight key infrastructure sectors spanning coal, crude oil, natural gas, petroleum and refinery products, fertilisers, steel, cement and electricity remained subdued in December. Growth in December was also slower than the 6.3% expansion posted in 2010. Between April and December, growth rose 4.4%, lower than 5.7% registered in the same year-ago period. The eight infrastructure industries have a combined weight of 37.90% in the index of industrial production. The industrial sector has been hit hard by high interest rates, rising input costs and policy delays. Industrial output rebounded in November and rose an annual 5.9% after declining for the first time in two years in October. Economists said they expected sluggishness in the industrial sector to continue for some time. Monday’s data showed the output in cement and electricity helped the overall numbers in December. The cement sector registered a growth of 13.3% in December 2011 against a decline of 2.2% in December 2010. Electricity generation grew 8% in December 2011 compared to 5% growth in December 2010. Coal production rose 5.6% in December 2011 compared to 3.8% in December 2010. However, in cumulative terms, coal production fell 2.7% during April-December 2011-12 compared to 0.8% growth during the same period of 2010-11. Crude oil and natural gas remained laggards. Crude oil production fell 5.6% in December 2011 compared to a growth of 15.8% in December 2010, while natural gas production declined 10.8% in December 2011 compared to a fall of 0.2% in December 2010.