In a pleasant surprise, infrastructure industries grew 5.1% in September, after hitting a low of 2.7% a month before. The pick-up in infrastructure growth could be pointer to an upswing in industrial production, after a disastrous August when the industrial growth plunged to 1.3%?the lowest in a decade?and sparked off fears of a recession in the economy. Since the six infrastructure industries have a 26.68% weight on the index of industrial production (IIP), ?the figures may have a bit of positive impact on the IIP,? according to Naresh Thakkar, managing director of rating agency ICRA.
The growth in the infrastructure sectors was the highest in the last seven months , according to data released by the department of industrial policy and promotion on Friday. But it was still marginally lower than the 5.8% growth clocked in September 2007. The overall growth in April-September 2008-09 was down to 3.9%, a good 3 percentage points lower than the year-ago figure.
Figures for the latest month show that only three of the six infrastructure industries showed acceleration in output. The most impressive growth was in the coal sector, where growth picked up from 6.3% in September 2007 to 10.7% in September 2008.
Figures for the first six months of the current year also show that coal output grew more than three-fold to 7.9%, from just 2.8% in April-September 2007-08.
The other sector where growth accelerated substantially in September was cement, moving up to 7.9% from 5.4% a year earlier. However, the 6% growth in cement production in April-September was still significantly lower than the 8.7% growth in the same period of the previous year.
Similarly, though the generation of electricity has climbed up marginally to 4.4% in September, the 2.6% overall growth of the sector in the first half was around a third of the growth rate in the same period last fiscal.
Among the three laggard sectors, the growth in September was a negative 0.8% in crude oil while petroleum refinery products and finished steel registered a growth of 4.5% and 5.3%, respectively.
The latest data comes when the economy is grappling with intermittent liquidity shortages, costly credit and lack of leverage. Prime Minister Manmohan Singh had on Monday assured industry leaders that public and private sector infrastructure projects would not face funding constraints. The government has takenseveral measures such as relaxing the external commercial borrowing policy for the infrastructure sector and allowing telecom firms to raise external debt for 3G licences, besides paring policy rates. RBI now plans to relax the bad loan provisioning norms for banks in case an infrastructure project could not take off because it is subjudice.