The eight ‘core' infrastructure industries have registered a 5.3 per cent year-on-year growth in May, down from 7.4 per cent during the same month of last year.
The cumulative annual growth for April-May 2011, at 4.9 per cent, also works out lower than the 7.9 per cent during the opening two months of the previous fiscal.
“The data show that the production of industries contributing to the supply side continues to grow at a steady, even if not robust, pace. There is no indication of any marked slowdown on this count, though the demand side picture would be clearer only from the Index of Industrial Production (IIP) data,” said Ms Sonal Varma, India Economist at Nomura Financial Advisory and Securities.
The overall drop in the growth of the core industries — making up 37.9 per cent of the IIP— has been largely on account of natural gas and cement.
Natural gas production has shown a year-on-year decline in May as well as April-May, basically reflecting output reduction from Reliance Industries' Krishna Godavari D-6 fields. A more significant pointer to economic activity, though, is from cement and steel production, with the former recording a decline and the latter a sharp dip in growth.
Among the other core industries, the growth rates during May and April-May has been higher compared with last year for coal, crude petroleum, fertilisers and electricity, while being marginally lower for refined petro-products.
Interestingly, in seven out of the eight core industries (fertilisers being the exception), the production indices for May 2011 are lower than that in March 2011. The former Chief Statistician of India, Dr Pronab Sen, however, felt one should not infer signs of a slowdown from that.
“There is a seasonality element, wherein production always peaks in March and slow down in the subsequent summer months. Also, since March is the last month of the fiscal, there is a tendency for companies to artificially boost volumes in order to achieve turnaround targets. It is more accurate to compare year over year”, he pointed out.