Reviving hopes of a recovery in industrial production, which has been sliding since December, the index of infrastructure sectors grew 4.3% in April, against 2.3% a year earlier. The index includes six core sectors?cement, finished steel, coal, electricity, crude oil and refinery products?which account for 26.7% of the country?s total industrial production.
?As infrastructure forms a substantial part of the index of industrial production (IIP), we can hope for an overall industrial revival in April,? said Crisil principal economist DK Joshi.
However, analysts said manufacturing and commerce would also need to perform much better than they have in recent months for overall industrial production to show marked improvement. ?We expect IIP for April to be much better. But the true revival of the Indian economy largely depends on the growth of manufacturing as well as the trade sector,? said Care Ratings chief economist Soumendra K Dash.
Industrial production dropped consecutively in December (by 2%), January (0.5%), February (1.2%) and March (2.3%). IIP figures for April are expected later this month.
Analysts said infrastructure sector growth in April could be attributed to the government?s emphasis on housing, as well as on roads & highways, in its quest to boost demand in the economy, which turned weak in the second half of last fiscal. India grew 6.7% in 2008-09, lower than 2007-08?s 9% and the average 8.5% since fiscal 2004.
The government announced three stimulus packages in the second half of the last financial year, spanning several sectors. As a result of increased public spending, government consumption as a percentage of GDP rose to 11.6% in 2008-09 from 10.1% a year earlier. In contrast, private spending dropped to 54.7% from 55% the previous year.
?Increased government spending on infrastructure has improved demand for steel and cement,? Joshi said. In April, the production of steel and cement rose 1.6% and 11.7%, respectively. Coal output increased the most at 13.2%, against 10.4% in the same month the previous fiscal, while electricity generation improved 6%, against 1.4%. However, production of crude oil and refinery products dropped by 3.1% and 4.3%, respectively.