Key infra sector growth slows down to 4-month low of 8.1% in September

The growth of eight key infrastructure sectors slowed down to a 4-month low of 8.1% in September 2023 against 8.3% a year ago, according to the official data released on Tuesday. The growth rate in the output of refinery products, fertiliser, cement and electricity during the month under review has decelerated, while it was negative in the case of crude oil.

It is noteworthy that these eight industries account for 40.27% of IIP (Index of industrial production). The previous low was in May, when the growth rate of these sectors stood at 5.2%.

Crude oil output dipped by 0.4% in September as against a contraction of 2.3% in the same month last year, the data showed.

The core sector growth in August was 12.5%, which was highest since June 2022, when it was 13.2%.

The output growth of the eight sectors was also lower at 7.8% in April-September 2023-24 against 9.8% in the year-ago period.

In September, coal, natural gas, and steel production rose by 16.1%, 6.5% and 9.6%, respectively.

The growth rate in the production of refinery products, fertiliser, cement and electricity slowed down to 5.5%, 4.2%, 4.7% and 9.3%, respectively, in September this year against the last year's corresponding figures of 6.6%, 11.8%, 12.4% and 11.6%.

Icra Ltd Chief Economist Aditi Nayar said a pick-up in rainfall expectedly flattened the core sector expansion in September to a four-month low from 12.5%, amid the slowdown in growth of seven of the eight constituent sectors barring fertiliser output.

"The year-on-year growth in cement production decelerated sharply to six-month low of 4.7% in September...The IIP (index of industrial production) growth is likely to moderate to high single digits in September taking a cue from the core sector's trajectory," she said.