Given their 40% weight in the index of industrial production (IIP), the poor show by the infrastructure industries could limit the August index of industrial production (IIP) expansion to just 1-1.5%, against 4.8% in July, experts said. IIP data for August will be released on October 12.
Apart from steel and fertilisers, six of the eight industries-coal, crude oil, natural gas, refinery products, cement and electricity-remained in the negative zone in August, the latest data showed.
A rainfall deficit in August last year had kept production and mining activities going, leading to an impressive 13.4% jump in output during the month from the previous year. Sequentially, the output of the core industries contracted 4.2% in August.
Steel production grew in August but at the lowest pace (4.5%) in 26 months, while fertilizer output rose 3.2%, against 5.3% in previous month.
However, the output of other industries, such as coal, crude oil, natural gas and refinery products contracted by 8.1%, 3.4%, 3.6% and 1%, respectively, in August. Electricity and cement output dropped 5% and 3%, respectively. In July, only crude oil and natural gas had witnessed contraction while the other six industries recorded growth rates ranging from 5.3% to 7.9%.With this, core sector growth in the first five months of the fiscal year touched 4.6%, against 8% a year before, the data showed.
Given the core infrastructure sector contraction, Icra chief economist Aditi Nayar expects IIP growth to have slowed to about 1% in August. “Core sector output may remain lacklustre in September 2024 given the late withdrawal of the monsoon, before normalising in the third quarter,” she said.