Infrastructure sector growth slows to 3-month low of 1.1% in July

Tribune News Service

New Delhi, August 31

On the back of poor showing on GDP numbers, the economy is struggling with recovery as infrastructure sector growth slowed to 3-month low of 1.1% in July.

The expansion in eight core sectors, which contribute around 38% to the overall industrial production, was 4.1% 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%, 4.4% and 2.6%, respectively, in July this year.

Aditi Nayar, senior economist, ICRA, said while the performance of the individual sectors was mixed in July 2015, the overall slowdown in core sector growth relative to the previous month is disappointing and does not augur well for overall industrial growth in that month.

In particular, the stagnant performance of the coal sector is in contrast to the healthy 6-8% growth sustained over the previous four months, she added.

The fiscal deficit in the first four months of the current financial year stood at Rs 3.85 lakh crore, or 69.3% of Budget estimates for 2015-16, as the government stepped up its plan expenditure. The fiscal deficit during April-July 2014-15 was 61.2% of the Budget estimates.

The fiscal deficit — gap between expenditure and revenue — for 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.

Of the total expenditure, plan spending was over Rs 1.57 lakh crore and non-plan was over Rs 4.43 lakh crore.

Devendra Kumar Pant, chief economist, India Ratings, said the fiscal deficit during April-July 2015 increased 25.9% over last year. While gross tax revenue grew by 17.9%, the performance of corporate tax (6.1% increase) and income tax (4.6% decline) affected gross tax collection performance.

Pant said low crude oil price and increased buoyancy of customs and excise is providing some comfort. He said the government has front loaded plan capital expenditure (84.1% growth) which will help in improving investment sentiments.