Infrastructure sector growth slowed to 3-month low of 1.1 <g data-gr-id="60">per cent</g> in July as <g data-gr-id="81">output</g> of crude oil, natural gas and steel contracted, making a case for a further rate cut by the Reserve Bank. The expansion in eight core sectors, which contribute about 38 per cent to the overall industrial
production, was 4.1 per cent in July last year.
According to the data released by the Commerce and Industry Ministry today, output of crude oil, natural gas and steel contracted by 0.4 per cent, 4.4 per cent and 2.6 per cent respectively in July this year.
Growth in <g data-gr-id="68">output</g> of coal, cement and electricity slowed to 0.3 per cent, 1.3 per cent and 3.5 per cent respectively last month. However, refinery products and fertiliser production grew by 2.9 per cent and 8.6 per cent respectively. In March and April this year, the eight sectors had contracted by 0.1 per cent and 0.4 per cent respectively.
However, in May and June the infrastructure sector had expanded by 4.4 per cent and 3 per cent.
The slowdown in the core sector is expected to raise the clamour for <g data-gr-id="69">further</g> rate cut by RBI, which has already lowered the key lending rate thrice this year. The next monetary policy review is on September 29. During the April-July period of the current fiscal, the core sector output has expanded by 2.1 per cent as against 5.5 per cent in the first four months of 2014-15.
The overall growth of eight core industries in the entire 2014-15 fiscal stood at 3.5 per cent against 4.2 per cent in the previous fiscal. Moreover, reflecting a muted performance, the GDP growth slowed to 7 <g data-gr-id="49">per cent</g> in the April-June quarter, from 7.5 <g data-gr-id="50">per cent</g> in the previous quarter, amid deceleration in farm, services and manufacturing sectors.
A slower GDP growth, along with <g data-gr-id="72">slower</g> pace of industrial production expansion, <g data-gr-id="73">however</g> bolsters the case for a rate cut by the Reserve Bank. The Gross Value Added (GVA), a new concept introduced by CSO to measure the economic activity, also slipped during the first quarter to 7.1 <g data-gr-id="66">per cent</g>, from 7.4 <g data-gr-id="67">per cent</g> a year ago.
The GDP grew at 7.5 <g data-gr-id="54">per cent</g> in the January-March quarter while it was 6.7 <g data-gr-id="55">per cent</g> in the April-June quarter last year, according to data from the Central Statistics Office (CSO).
The nominal GDP and GVA at current market price showed a steep decline in the quarter under review. The nominal GDP slipped to 8.8 per cent in Q1 from 13.4 <g data-gr-id="61">per cent</g> a year ago while the GVA growth rate nearly halved to 7.1 per cent from 14 per cent a year ago.
The government towards the beginning of the fiscal has projected a growth rate of 8.1-8.5 <g data-gr-id="63">per cent</g> in the current fiscal, which may be difficult to achieve. RBI, which has cut interest rate by 0.75 <g data-gr-id="52">per cent</g> in three tranches since January, is scheduled to announce the next bi-monthly policy on September 29.
The data showed that the manufacturing sector GVA at constant prices (2011-12) rose 7.2 <g data-gr-id="62">per cent</g> in the April-June quarter as against 8.4 per cent in the year-ago period. Similarly, the growth in the output of electricity, gas, water supply and other utility services decelerated sharply to 3.2 per cent as against 10.1 per cent a year earlier.
The farm and allied sectors grew at 1.9 <g data-gr-id="56">per cent</g>, down from 2.6 <g data-gr-id="57">per cent</g> in the previous year. The output of mining and quarrying sector too slipped marginally to 4 <g data-gr-id="58">per cent</g>, from 4.3 <g data-gr-id="59">per cent</g> a year ago.
Financial, real estate and professional services growth shrank to 8.9 per cent as against 9.3 per cent a year earlier. However, the construction activity registered an increase of 6.9 <g data-gr-id="46">per cent</g>, up from 6.5 <g data-gr-id="47">per cent</g> in the previous year.
4-month fiscal deficit at 69.3% of estimate for full year
The fiscal deficit in the first four months of <g data-gr-id="170">current</g> financial year stood at Rs 3.85 lakh crore, or 69.3 per cent of Budget estimates for 2015-16, as <g data-gr-id="171">government</g> stepped up its plan expenditure. The fiscal deficit during April-July 2014-15 was 61.2 per cent of the Budget estimates. The fiscal <g data-gr-id="136">deficit-gap</g> between expenditure and <g data-gr-id="137">revenue-for</g> the entire current fiscal has been pegged at Rs 5.55 lakh crore. Net tax receipts in April-July period of 2015-16 stood at Rs 1.54 lakh crore. Total expenditure of the government during April-July was nearly Rs 6 lakh crore, or 33.8% of the entire year estimates.