Core sector growth at 31-month low, crawls 2.3% in September

NEW DELHI: India’s infrastructure sector grew at its slowest in 31 months in September, dragged down by a virtual standstill in coal mining and a drop in the production of natural gas and fertilisers.

The output of eight infrastructure industries — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — rose 2.3% from 3.3% a year ago, slower than an upwardly revised growth of 3.7% in August and the lowest since March 2009. The infrastructure sector accounts for 38% of the country’s industrial output.

“The core sector figures are very dismal and will continue to remain a drag on the index of industrial production,” said Shubhada Rao, chief economist with YES Bank.

Industrial growth had dropped to a 21-month low of 3.8% in July but recovered marginally to 4.04% in August. “There may be some improvement in the consumer goods sector in September due to the festivals, but the core industries will drag down the IIP nonetheless,” said Madan Sabhnavis, chief economist, Care Ratings.

Analysts said unseasonal rains and policy ambiguity have aggravated the adverse impact on the mining sector. “Mining is turning out to be a big drag on the core industries and even on manufacturing. The issues involved must be resolved quickly and all pending decisions and coal auctions must be cleared,” said DK Joshi, chief economist, Crisil India. “Coal and cement did badly due to unseasonal rains,” Rao said.