June 28th 2024.
New Delhi: The growth of the eight key infrastructure sectors in India has increased by 6.3% in the month of May, according to the latest official data released on Friday. This growth can be attributed to the strong performance of sectors such as coal, natural gas, and electricity. However, it is noteworthy that this growth rate is slightly lower than the 6.7% growth seen in April.
These core sectors, which include coal, crude oil, natural gas, refinery products, fertiliser, steel, cement, and electricity, had recorded a growth rate of 5.2% in May 2023. The data further reveals that the production of fertiliser, crude oil, and cement witnessed a decline in May. On the other hand, the output of these sectors saw a significant increase of 6.5% in the first two months of the current fiscal year, as compared to 4.9% in the same period last year.
When it comes to specific sectors, the production of coal, natural gas, and electricity experienced a growth of 10.2%, 7.5%, and 12.8%, respectively, in May 2024. In comparison, the growth rates for these sectors in the same month last year were 7.2%, 0.3%, and 0.8%. However, the production growth of refinery products and steel slowed down to 0.5% and 7.6% in May 2024.
These eight core sectors collectively contribute to 40.27% of the country's Index of Industrial Production. Commenting on the data, Aditi Nayar, Chief Economist at Icra Ltd, stated that although the core sector growth has remained above 6% for the fourth consecutive month, it has slightly eased in May. She also suggested that factors such as the ongoing heatwave in some parts of the country and the phased parliamentary elections may have affected the activity and execution in certain sectors.
On the other hand, the demand for power has increased due to the heatwave, leading to a rise in the growth of coal and electricity in May 2024 as compared to the previous month. Nayar predicts that the Index of Industrial Production growth rate for May 2024 will be around 4-5%.
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