Core sector growth rate halves in January

The rate of growth of key core sectors almost halved to 4.2 per cent in January from 8.3 per cent in the same month a year ago, adding to evidence of a precipitating economic slowdown.

Official data released on Wednesday showed performance of the six core sectors, including crude oil production, power, cement and coal, has gone into a tailspin.

Crude oil production shrank 0.2 per cent in January compared with 4.7 per cent growth in the same month last year. Growth in coal production also declined to 4.8 per cent from 9.9 per cent in January 2007.

Meanwhile, the electricity sector witnessed growth of 3.3 per cent in January against 8.3 per cent last year and cement registered growth of 5.2 per cent, down from 7.2 per cent.

During April-January 2007-08, the growth rate of these core industries declined to 5.5 per cent from 8.9 per cent during the same period in 2006-07.

“The slowdown in infrastructure is a matter of concern. It is a constraint to achieve high growth. However, the slowdown has not come as a surprise as industrial output was already showing signs of decelerating but the infrastructure sector is slowing faster than anticipated,” D.K Joshi, principal economist with CRISIL, said.

Industrial growth has moderated to 8.7 per cent in the first 10 months of 2007-08 from 11.2 per cent in the corresponding period of last year.

Crude petroleum, petroleum refinery products, coal, electricity, cement and finished carbon steel form the core infrastructure industries group, accounting for 26.7 per cent weight in the overall index of industrial production, seemed to fall due to low demand, high interest rates and an overall slowdown in economic growth.