June infrastructure output jumps 6.5% YoY

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NEW DELHI: The infrastructure sector, accounting for a fourth of India’s industrial output, grew 6.5% in June from a year earlier, compared to 2.8% in the previous month, showing signs of an economic revival. Output of six infrastructure sectors-- coal, cement, crude oil, electricity, finished steel and petroleum refinery products--had risen 5.1% in the same month last year.

Official data released by the ministry of commerce and industry showed on Thursday that six sectors grew 4.8% in the first quarter of the current fiscal ending June as compared to 3.5% a year earlier.

Coal output recorded an impressive growth rate of 14.7% in June compared to 6.1% the same month a year ago. During the first quarter of the fiscal, coal output grew by 12.7% (provisional) compared to an increase of 8.4% during the same period last year.

Cement production rose by 12.8% in June as against 6.6% the same month last year, while finished (carbon) steel production rose 5.3% (provisional) in June, compared to 10.4% (estimated) in June 2008.

Economists pointed out the faster growth was the result of the economic stimulus measures the government has taken. "Sectors like steel and cement are very cyclical in nature. The government’s counter-cyclical stimulus measures are showing their result by way of a pick up in construction activities. Accordingly the industrial output figures will also improve," said Crisil director and principal economist D K Joshi.

"In the last three months, it (industrial growth) is improving, but we want to ensure that this recovery continues and India returns firmly on the high growth trajectory," Commerce and Industry Ministry Anand Sharma said here on the margins of a business meet.

"It's clear that the government's stimulus packages and the budgetary proposals have had a positive impact...In fact, sectors like coal and cement have registered a double digit growth which is a very encouraging sign," he told reporters.

Besides coal and cement, power generation increased 7% and crude oil 4% in June. Petroleum refinery output, however, declined by 3.7% in the same month.