Key Infrastructure Sectors See Slower Growth in September
Infrastructure, real estate, building, budget. Out of the eight key sectors, three recorded negative growth in September.
InfrastructureReal EstateEconomic GrowthIndustrial ProductionCore SectorsReal Estate NewsOct 30, 2024
Out of the eight key sectors, crude oil, natural gas, and electricity recorded negative growth in September. Specifically, crude oil production decreased, natural gas output fell, and electricity generation also saw a decline. On the positive side, the growth rate of coal production was 2.6 per cent, fertiliser production grew by 1.9 per cent, and steel output increased by 1.5 per cent. However, these figures are much lower than the respective growth rates of 16 per cent, 4.2 per cent, and 14.8 per cent in September last year.
Cement and refinery products showed a more robust performance, with cement output rising by 7.1 per cent and refinery products increasing by 5.8 per cent in September. These figures indicate a slight improvement in these industries.
The growth of core sectors, which include coal, crude oil, natural gas, refinery products, fertiliser, steel, cement, and electricity, was 4.2 per cent during the April-September period of the current fiscal year. This is a notable decline from the 8.2 per cent growth recorded in the same period last year.
These eight core sectors contribute 40.27 per cent to the Index of Industrial Production (IIP), which is a key indicator of overall industrial growth in the country. The slowdown in these sectors can have a significant impact on the economy.
Commenting on the data, Aditi Nayar, Chief Economist at ICRA Ltd, noted that the easing of disruptions caused by rainfall on sectors like mining and electricity contributed to the turnaround in core sector performance in September, following the mild contraction in August. She also highlighted that cement production improved to a six-month high.
ICRA projects the IIP to grow by about 3-5 per cent in September 2024, supported by a narrower contraction in electricity and mining output, a favorable base, and a sharp uptick in the growth of GST e-way bills, driven by pre-festive stocking.
The slowdown in these key sectors is a concern for policymakers and industry experts, as it can affect overall economic growth and investment in infrastructure, real estate, and other related sectors. The government and industry stakeholders will need to closely monitor the situation and take appropriate measures to stimulate growth in these critical areas.
Frequently Asked Questions
What is the Index of Industrial Production (IIP) and how is it calculated?
The Index of Industrial Production (IIP) is a statistical tool used to measure and reflect the growth rate of different industries in the economy. It is calculated by comparing the current period's industrial output with a base period, and it includes sectors such as manufacturing, mining, and electricity.
Which sectors are considered the core sectors in the IIP?
The core sectors in the IIP include coal, crude oil, natural gas, refinery products, fertiliser, steel, cement, and electricity. These sectors contribute 40.27 per cent to the IIP and are critical for the overall industrial growth of the country.
Why is the growth in the core sectors important for the economy?
The growth in core sectors is crucial because these industries form the backbone of the economy. They supply essential inputs to other sectors and have a significant multiplier effect, influencing employment, investment, and overall economic activity.
What factors contributed to the slowdown in the core sectors in September?
The slowdown in the core sectors in September can be attributed to various factors, including the negative growth in crude oil, natural gas, and electricity, as well as the moderation in the growth rates of coal, fertiliser, and steel. Disruptions caused by rainfall also impacted some sectors like mining and electricity.
What measures can be taken to stimulate growth in these sectors?
To stimulate growth in these sectors, the government and industry stakeholders can focus on improving infrastructure, providing fiscal incentives, reducing regulatory hurdles, and investing in technology and innovation. Additionally, promoting domestic production and reducing import dependence can also help in driving growth.
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