Core sector growth dipped to 5.2% in April 2011 as per Data released by Central Statistics Office

The Gross Domestic Product (GDP) data was released on 31 May 2011 by the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation. According to the data, the growth rate of core infrastructure industries slowed down to 5.2 per cent in April 2011 from 7.5 per cent achieved in the April 2010.

The official data on the six core industries — cement, steel, crude oil, petroleum refining, coal and electricity which together account for a weight of 26.68 per cent in the IIP (Index of Industrial Production) reflect the continued deceleration in industrial and overall economic growth during the initial months of the current fiscal owing to inflationary pressures and high cost of credit. The data on the six core industries show that a contraction in cement output coupled with a lower growth in finished steel production during April 2011 was mainly responsible for the slowdown in the infrastructure sectors.

The January-March period of 2010-11 had witnessed the slowest pace of growth in the last five quarters at 7.8 per cent, mainly owing to high overall inflation which hovered around 8-90 per cent.

While cement production contracted by 1.1 per cent during the month as compared to a healthy 8.8 per cent growth witnessed in April 2010, the output increase in finished steel also slowed down to 4.3 per cent as against a robust expansion of 12.9 per cent during April 2010. Significantly, this marks the lowest growth in finished steel output since July 2010.

The deceleration in production growth was on expected lines, keeping in view the high cost of credit being made available as part of the inflation-busting measures.

However barring cement and steel, the other four industries performed better. While electricity output went up by 6.8 per cent in April 2011 as compared to a growth of 6.9 per cent in April 2010, crude oil production put up a good show to more than double its growth from 5.1 per cent to 11 per cent in April 2010.
Petroleum refinery products also posted a higher growth of 6.6 per cent during April 2011 as compared to an increase of 5.3 per cent in April 2010. Coal output, on the other hand, witnessed a complete turnaround by clocking a growth of 2.9 per cent during the month in place of a contraction of 2.9 per cent during the April 2011.

The manufacturing sector, which accounts for 80% of India’s industrial output, grew at 5.5%, the slowest in 18 months. Currently there are around 1.6 lakh registered factories in India employing more than 11.3 crore people. Slower manufacturing sector growth will hurt corporate profitability and hurt employment prospects.