June infra growth dips from 7% to 19-month low of 0.4%

The growth rate of eight infrastructure sectors – coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity – was 7 per cent in June last year.

The production of coal declined by 6.7 per cent, refinery products by 0.2 per cent, fertiliser by 3.6 per cent and cement by 5.8 per cent, as per the data of the commerce and industry ministry.

Crude oil output rose to 0.6 per cent last month as against a decline of 4.3 per cent in June 2016.

According to the data, natural gas output rose by 6.4 per cent in June.

Steel production and power generation slowed to 5.8 per cent and 0.7 per cent in June this year from 8.8 per cent and 9.8 per cent in the same month last year, respectively.

Slow growth in key sectors would also have implications on the Index of Industrial Production (IIP) as these segments accounted for about 41 per cent to the total factory output.

In May, these eight sectors had recorded a growth rate of 4.1 per cent. The previous low was recorded in November 2015, when the sectors' output had declined by 1.3 per cent.

During April-June period of the current fiscal, growth of the eight core segments slowed down to 2.4 per cent against 6.9 per cent in the same period last year.

Rating agency ICRA said: "Available indicators present a subdued picture for industrial growth for June 2017, with the sequential decline in growth of non-oil exports, core sector output and automobile production."

Meanwhile, India's GDP growth is likely to be higher at 6.6 per cent in the June quarter from the previous three months this year even as the pick-up in growth numbers in India has lost some momentum on account of GST, says a report. According to Japanese financial services major Nomura, the pick-up in growth which was visible toward end-of March quarter had lost some momentum towards end of the June quarter due to destocking and uncertainty ahead of the Goods and Services tax (GST).

"Despite some loss of momentum, we expect average GDP growth in Q2 (April-June) to be modestly higher at 6.6 per cent y-o-y from 6.1 per cent in Q1 (January-March)," Nomura said in a research note.

It further noted that in the second half (H2) of 2017, growth recovery is expected to accelerate to 7.4 per cent led by a resumption of production after GST, ongoing remonetisation, normal monsoons and lower lending rates.