The output of eight core infrastructure industries rose 5.1% year-on-year in May but what raised eyebrows was the government’s sharp upward revision of the growth rate for April to a nine-month high of 6.3% from just 2.6% reported earlier.
The primary reason for the increase was a massive change in the growth rate of the output of steel, a fairly organised industry, in April from just 1.5% earlier to 19% now.
While such wide fluctuations have been witnessed in the reporting of GDP growth rates in recent years, the volatility has usually been less pronounced in that of the infrastructure sector expansion.
The overall infrastructure output – comprising sectors such as coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity – makes up for close to 40% of the index of industrial production (IIP). So, the sharp upward revision in infrastructure growth brightens the prospects of a further rise in the April IIP from 3.4% announced earlier, although the extent of the rise could vary sharply.
Steel and electricity production remained the biggest drivers of the infrastructure sector growth in May, having risen by 19.9% and 7.2%, respectively. But crude oil, refinery products, and fertiliser witnessed a contraction in output. During the April-May period, the overall eight core infrastructure sectors grew by 5.7%, against 4.4% a year earlier.
