Infrastructure sector growth data for November higher after near-stagnation

NEW DELHI: Output growth in eight infrastructure industries accelerated in November after near-stagnation in the previous month, raising hopes of a robust recovery in industrial growth from its 28-month low in October. The output of the core sector, which in India includes industrial inputs such as petroleum, coal, electricity and steel, expanded over 4.5-5% in November, a government official said, adding that the final figure could rise to 5%.

The official, who spoke on condition of anonymity as official figures have not been released, said preliminary data showed substantial improvement in coal output and power generation contributing significantly to the overall core sector rebound. Core sector output had slowed to 0.1 % in October from 2.3% in September.

In April-October this year, the growth of core industries slowed to 4.3% from 5.9% in the year-ago period. The sector grew 2.3% in November last year. The eight segments, which also include cement and fertiliser, have a combined weight of 38% in the index of industrial production, the most widely followed measure of industrial output.

“The government has taken many steps. In fact, the prime minister himself had constituted a group to look at the core sector. We can take it as a firm indication of improvement,” C Rangarajan, chairman of the Prime Minister's Economic Advisory Council, told ET.

The hope for a winter rebound for the $1.6-trillion economy has been bolstered by the rebound in coal production, which expanded 4.7% in November and 8% in the first half of December, after a 5.5% contraction in the April-October period that took a toll on power projects. The recovery in coal output has allowed a sharp step-up in electricity generation, which rose 15% in November and another 15% in the first half of December.

Both segments had been a drag on the core and industrial sectors for much of the current fiscal. The problems of the power sector had prompted the personal intervention of Prime Minister Manmohan Singh, who had directed the coal ministry to ensure supply of coal to power plants. Besides the rebound in core sector, some other recent indicators, such as the HSBC purchasing managers index and car sales, have shown improvement.