Growth 3.4% In Six Core-Infrastructure Industries - Dec 15, 2008

The Index of Six core-infrastructure industries having a combined weight of 26.7 per cent in the Index of Industrial Production (IIP) with base 1993-94 stood at 247.1 in October 2008 and registered a growth of 3.4% compared to a growth of 4.6% in October 2007. During April-October 2008-09, six core-infrastructure industries registered a growth of 3.9% as against 6.6% during the corresponding period of the previous year.

Crude Oil production (weight of 4.17% in the IIP) registered a negative growth of 0.3% in October 2008 compared to a growth rate of (-) 0.1% in October 2007. The Crude Oil production registered a growth of (-) 0.7% during April-October 2008-09 compared to 0.6% during the same period of 2007-08.

Petroleum refinery production (weight of 2.00% in the IIP) registered a growth of 5.0% in October 2008 compared to growth of 2.7% in October 2007. The Petroleum refinery production registered a growth of 4.5% during April-October 2008-09 compared to 8.8% during the same period of 2007-08.

Coal production (weight of 3.2% in the IIP) registered a growth of 10.9% in October 2008 compared to growth rate of 8.9% in October 2007. Coal production grew by 8.4% during April-October 2008-09 compared to an increase of 3.7% during the same period of 2007-08.

Electricity generation (weight of 10.17% in the IIP) registered a growth of 4.4% in October 2008 compared to a growth rate of 4.2% in October 2007. Electricity generation grew by 2.8% during April-October 2008-09 compared to 7.1% during the same period of 2007-08.

Cement production (weight of 1.99% in the IIP) registered a growth of 6.2% in October 2008 compared to 7.5% in October 2007. Cement Production grew by 6.0% during April-October 2008-09 compared to an increase of 8.5% during the same period of 2007-08.

Finished (carbon) Steel production (weight of 5.13% in the IIP) registered a growth of (-) 0.5% in October 2008 compared to 5.2% (estimated) in October 2007. Finished (carbon) Steel production grew by 4.2% during April-October 2008-09 compared to an increase of 7.3% during the same period of 2007-08.

Outlook- The Index of Six core-infrastructure decelerated in October 2008. The negative growth rate in index like crude oil and finished steel resulted in a lower growth in six infrastructures. The hard interest rate scenario, higher funding cost and financial instability on global and domestic front resulted slowdown in industrial activites in October 2008. To arrest the slowdown in industrial output the government and RBI has come up with various fiscal and monetary measures.

However all the measures taken by the government will take some time to be reflected in production numbers. At this background, we are expecting lower growth rate in IIP (index of industrial production) data, which will release tomorrow. Six infra industries hold 27% weight in IIP.