Slower growth in five of the six core sectors pulled down the overall growth rate in the index of infrastructure industries to 5.3 per cent in June 2007 against 7.7 per cent in the year-ago period.
This is the slowest growth rate in the past year in the country, raising concerns about an overall economic slowdown.
"This is a significant drop. On the supply side, our economy is dependent on the infrastructure industries so the June numbers are a cause of concern as it could have an impact on overall growth," said Siddhartha Roy, chief economic advisor of the Tata group.
The highest dip in growth of production was in coal. "This is not good news as a dip in coal production growth will have an impact on all the sectors, including steel and power and this is another area of concern," added Roy.
Coal production during June this year stood at 32.34 million tonnes.
Another crucial sector which saw a dip in production growth was crude petroleum, which recorded a negative growth of 1.8 per cent against 1.2 per cent during the same month of the previous year. Data also showed that the growth in crude oil production has been slowing down since December 2006.
"The dip in coal production and crude petroleum shows the problem is on the supply side," said Roy.
The only core infrastructure sector, which showed healthy growth during June was electricity.
The slowdown in the infrastructure index follows a similar deceleration in industrial growth in June, which slipped into single digits of 9.8 per cent, the lowest in the past three months, from 10.92 in May.
Analysts had attributed the slowdown in industrial growth to a dip in manufacturing production, which stood at 10.6 per cent in June as against 11.7 per cent in May.
Experts point out that the economy has shown signs of a moderate slowdown due to the monetary tightening measurers initiated by the Reserve Bank of India [Get Quote ] as well as the appreciation of rupee, which is impacting export growth.
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Source: rediff
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