August infrastructure growth inches up to 2.6%
Fall in steel output by 5.9% and coal’s measly 0.4% mutes the growth of core industries.
New Delhi: India's infrastructure sector grew by 2.6 per cent in August as a sharp decline in steel output offset robust growth in other sectors, government data showed indicating that overall industrial growth could remain sluggish.
The eight core industries growth inched up in August from 1.1 per cent in July but remained significantly lower than 5.9 per cent a year ago.
"Industrial growth for August would tend to be in the 3 per cent range going by past trends though the relation between the core sector and IIP growth has been severed due to the erratic nature of growth in the consumer and capital goods segments.," said Madan Sabnavis, chief economist of Care Ratings.
Steel output fell 5.9 per cent in August due to slack demand and dumping of cheaper steel by China and other countries taking advantage of sharper currency depreciation.
Coal output grew just 0.4 per cent in August while crude oil was up 5.6 per cent, natural gas 3.7 per cent, refinery 5.8 per cent, fertiliser 12.6 per cent, cement 5.4 per cent and electricity 5.6 per cent.
During April-August, the infrastructure sector grew 2.2 per cent as compared with 5.6 per cent during the same period last year.
On Tuesday, RBI slashed policy interest rates by 50 bps to stimulate demand and spur industrial growth. RBI has lowered rates by 125 bps so far this year as inflation has ebbed and growth slowed.
After growing by 7.3 per cent in FY15, India's GDP grew by 7 per cent in April-June which has raised concerns the economy may not be able to attain the finance ministry's projected target of 8-8.5 per cent.