Core sector growth falls to 0.5%

Output of key infrastructure industries grew at its slowest pace in three months, dashing hopes of a quick revival in industrial production. The output of eight core segments — coal, crude oil, natural gas, refinery products, fertilizer, steel, cement and electricity — rose 0.5% in January compared to the upwardly revised 4.6% a month earlier, data released on Tuesday showed. Core sector output had expanded 6.3% during the corresponding month in 2011. The sharp drop in growth was due to a 2.9% contraction in steel output, 2% drop in crude oil output, 8.9% fall natural gas and 4.6% decline in refinery products. Cumulative core sector growth for April to January stood at 4.1% against 5.7% in the year-ago period. The eight industries, which have a combined 37.9% weight in the index for industrial production, are likely to pull down the IIP for the month. Prime minister Manmohan Singh has already constituted a group to look into the slowdown in the infrastructure sectors. Electricity and fertilizer production grew at 2.4% and 4%, respectively, during the month. Within the eight industries, coal production continued to expand at 7.5% in January and cement also recorded a robust growth rate of 10.6%. After the data was released, the stock market rallied on speculation that the poor growth will force RBI to cut rates at its policy review on March 15.