Core sector growth improves to 3.8%

Written by Agencies | New Delhi | Updated: Jun 30 2012, 02:08am hrs
Growth rateReflecting slowdown in the economy, growth rate of eight infra sectors decelerated in May. (Reuters)
In a silver lining for flagging Indian economy, eight core sectors posted a higher growth rate of 3.8 per cent in May against a dismal 2.2 per cent expansion rate in the previous month.

The infrastructure sector had grown 5.8 per cent in May 2011.

However, the cumulative growth rate of infrastructure industries in April-May 2012 was lower at 3.4 per cent, from 5 per cent in the same period last year, according to the data released by the Commerce and Industry Ministry today.

The eight industries - coal, crude oil, natural gas, fertilisers, petroleum refinery products, electricity, cement and finished steel - have a weight of 37.9 per cent in the Index of Industrial Production (IIP).

Economists said the improvement in May would have a positive impact on the Index of Industrial Production (IIP) numbers.

"The numbers are better than April. It would help in the improvement of the IIP numbers," Crisil Principal Economist D K Joshi said.

Industrial production declined by 3.5 per cent in March mainly on account of contraction in manufacturing and mining output.

Hit by global woes and domestic problems, the economic growth rate slowed to nine-year low, both in the March quarter at 5.3 per cent and for 2011-12 fiscal at 6.5 per cent, prompting the industry to demand "immediate and bold action" to arrest slowdown.

Natural gas and fertiliser output contracted by 10.8 per cent and 15.1 per cent respectively during May.

Petroleum refinery products and crude oil production slowed down to 2.9 per cent and 0.5 per cent, from 4.5 per cent and 9.8 per cent respectively during May 2011.

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