Mumbai:
A substantial slowdown in the production of coal, steel and petroleum products
dragged overall growth in the six core sector industries to 6.3 per cent in July
2007 against 10.9 per cent in the same month last year. This
has compounded the problem of a slowdown in overall industrial production that
signals a moderation in the country''s overall economic growth. Core
infrastructure industries of crude petroleum - petroleum refinery products, coal,
electricity, cement and finished steel - registered a decline in growth during
the month as higher interest rates curbed demand for manufactured goods like automobiles
and consumer durables, besides housing and commercial real estate. The
performance of infrastructure sector mirrors the huge fall in industrial output
- from 13.2 per cent in July 2006 to 7.1 per cent in July 2007. "The
index of industrial production (IIP) figures for July are disappointing,"
finance minister P Chidambaran said, but hoped demand will pick up once the festival
season kicks off later this month. Crude
petroleum showed a negative growth of 0.9 per cent in July as against 4.10 per
cent. Coal output dropped to 1.1 per cent from 9.1 per cent. Finished steel production
growth almost halved to 7.9 per cent from 15 per cent. The six sectors carry a
26.7 per cent weightage on the IIP. "Contraction
in credit has achieved the purpose of controlling inflation but now we should
ensure that growth is not impacted," commerce and industry minister Kamal
Nath said. He
said the Reserve Bank should revise the monetary policy and ensure that credit
contraction does not lead to decline in industrial growth. The
slowdown in core sector could have a direct bearing on economic growth, as well
as indirect adverse effect on other sectors that use inputs from these industries.
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