Key Industries Grow 6.5%, Add To All-Round Cheer

Key Industries Grow 6.5%, Add To All-Round Cheer
The Economic Times, July 24, 2009, Page 1

Our Bureau NEW DELHI

THE six core infrastructure industries grew 6.5% in June on the back of a robust performance by cement and steel, adding to the all-round cheer spawned by betterthan-expected corporate results and improved monsoon showers last week.

The infrastructure basket comprising coal, crude oil, refining, power, cement and finished steel has a 27% weightage in the index of industrial production (IIP), and the June surge hints at overall industrial growth picking up, according to economists.

A year ago, the core sector had grown by 5.1% while the May 2009 growth was at 2.8%. Cement and steel, both crucial inputs for construction activities, topped the chart with a growth of 12.8% and 5.3%, respectively. “Sectors like steel and cement are very cyclical in nature. The government’s counter-cyclical stimulus measures are showing results by way of a pickup in construction activities. Accordingly, the industrial output figures will also improve,” said DK Joshi, director and principal economist at rating agency Crisil.

The sharp uptick in the production of coal and electricity generation is also in keeping with the increased energy consumption expected as economic growth accelerates.

“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 minister Anand Sharma said on the margins of a business meet on Thursday.

“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.