India’s Infrastructure Output Declines

NEW DELHI (Reuters) – India’s infrastructure output in June rose 4% year-on-year, the slowest pace in nearly two years, as monsoons moderated electricity demand.

Infrastructure output, which accounts for 40% of India’s industrial production and measures activity in eight sectors, including refinery products and electricity, last saw a slower growth rate of 0.7% in October 2022.

Growth in May was revised higher to 6.4%.

• Coal production grew 14.8% in June.
• Electricity generation rose 7.7%, compared to 10.2% and 13.7% growth in May, respectively.
• Steel production grew 2.7%, down from 6.8% the previous month.
• Natural gas output rose 3.3%, compared to a 7.5% jump in May.

Infrastructure output expansion slid to a 20-month low due to a mix of moderation in growth and deeper contraction in five of the eight constituents, said Aditi Nayar, economist at ICRA.

• Cement production rose 1.9%, compared with a drop of 0.6% in May.
• Fertilizer production increased 2.4%, following a 1.7% fall in May.

However, refinery products declined by 1.5%, contrasting with a 0.5% rise in May, and crude oil production fell 2.6%, compared with a 1.1% decrease in May.

With the decline in infrastructure output, India’s index for industrial production (IIP) in June may grow by 3.5%-5%, Nayar added. The Indian government will release IIP data for June on August 12.