Infra sector growth slips to 5-month low at 2.8% in May

New Delhi: Infrastructure sectors grew at five-month low rate of 2.8 percent in May, slipping from a four-year high of 8.5 percent in previous month, as oil and natural gas output contracted.

The eight infrastructure sectors -- coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity -- had expanded by 4.4 percent in May 2015. The eight core sectors comprise nearly 38 percent of total industrial production.

In April, these sectors grew at an over four-year high rate of 8.5 percent, helped by double-digit expansion in refinery products and electricity generation.

The May growth numbers are the lowest since December last when the core sector had expanded by just 0.9 percent.

A decline in production of crude oil (-3.3 percent) and natural gas (-6.9 percent) dragged the growth rate to a five-month low.

Also, growth in output of refinery products (1.2 percent), cement (2.4 percent) and electricity (4.6 percent) also slowed down in May as compared to the same month last year. These segments had expanded by 7.8 percent, 2.7 percent and 6 percent, respectively in May 2015.

Coal output growth was also lower at 5.5 percent in May this year compared to 7.6 percent in year-ago period.

Only fertiliser and steel output recorded healthy growth. It increased by 14.8 percent and 3.2 percent in the month under review.

During April-May 2016-17, the growth of eight core infrastructure sectors increased by 5.5 percent from 2.1 percent in the same period last year.

Commenting on the core sector growth numbers, ICRA said slowdown in May suggests a low likelihood of a meaningful improvement in the performance of the IIP in the just-concluded month.

"As expected, a waning of the favourable base effect for sectors such as refinery products, electricity, cement and steel, has led to a slide in core sector growth to 2.8 percent in May from the high 8.5 per cent in April 2016," it said in a statement.