Core sector growth in India slips to 4 percent

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The index of six infrastructure industries - comprising crude oil, refinery, steel, cement, electricity and coal - rose to 243 in December 2007 from 233.7 in the same month a year earlier, translating into a growth rate of just 4 percent as against 9 percent in the corresponding month of the previous fiscal year, the government said.

The index of six core-infrastructure industries has a combined weight of 26.7 percent in the Index of Industrial Production (IIP).

The cumulative growth of the core sectors in the period April-December 2007-08 stood at 5.7 percent as against 8.9 percent in the same period last year.

Industry experts believe that growth in core sectors will slip further as the decline in IIP continues.

Data released by the commerce ministry showed that barring the coal sector, which grew a healthy 8.4 percent over 2.9 percent a year ago, the growth rate in all the other sectors fell.

The crude oil sector was the worst performer, registering a negative growth of 1.5 percent in December 2007 as against a positive expansion of 10.7 percent in the same month a year ago. Analysts have blamed it on a near-flat production by ONGC and a dip in production by OIL, the two largest public-sector producers, to the decline in crude oil production.

Whereas the growth in electricity generation declined to 3.8 percent in December 2007 from 9.1 percent a year ago, cement production grew by 3.9 percent in December 2007 against 8 percent in the same month of the previous year.

Finished steel (carbon) production rose by 5.1 percent in December 2007 as against 10.2 percent in December 2006.

Petroleum refinery production also grew a marginal 2 percent in December 2007 against 10.8 percent in December 2006.

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