India's key infrastructure sector remained under stress in March with data showing that annual growth in output fell, dragged down by a sharp decline in cement and steel sectors. Data released by the commerce and industry ministry showed the core sector comprising steel, cement, crude oil, natural gas, refinery products, fertilizers, electricity and coal, contracted 0.1% in March compared to a 4% growth in the same month earlier year.
For 2014-15, the sector grew 3.5% compared to an expansion of 4.2% in the year earlier period. The core sector data has remained volatile and has hurt overall industrial growth. The sector accounts for 38% of the index of industrial production.
Economists said the data showed that a wider revival in industrial growth was yet to be visible and called for government action to fast-track stalled projects. “The stagnation in core sector output and contraction in merchandise trade are expected to outweigh the mild uptick in automobile production in March 2015, leading us to expect a moderation in industrial growth from the three-month high of 5% in February 2015,” Aditi Nayar, senior economist at rating agency ICRA, said.
“While capital goods output witnessed a 10% expansion in January-February 2015, boosted by the sharp rise in output of a few sub-components, we remain unconvinced regarding the sustainability of the same, as a broad-based revival in investment activity is yet to take root,” she said.
Four sectors including steel, cement, natural gas and refinery products fell during March, while growth in coal and electricity sectors slowed down, which impacted the overall number.
