NEW DELHI: The output of the country’s eight key infrastructure industries grew by 4 per cent year-on-year in June, slowest in last 20 months owing to a high base effect and reduced electricity demand due to the monsoon season among other reasons. In comparison, the output growth was 6.4 per cent in May 2024 and 8.4 per cent in June 2023.
The eight sectors - coal, steel, cement, fertilizers, electricity, natural gas, refinery products, and crude oil - account for two-fifths of India’s overall industrial production.
Except for crude oil and refinery products, all other sectors reported positive growth in June. Coal production surged by 14.8 per cent, driven by increased demand for electricity.
Electricity generation grew by 7.7 per cent which although lower than the 13.7 per cent growth seen in May, was an improvement over the 4.2 per cent growth recorded in June 2023. Additionally, the production of fertilizers, natural gas, steel, and cement saw growth rates of 2.4 per cent, 3.3 per cent, 2.7 per cent, and 1.9 per cent respectively, compared to the same period last year.
The eight core sectors contribute 40.27 per cent to the Index of Industrial Production (IIP) which measures overall industrial growth. Crude oil, and refinery products’ output contracted by (-) 2.6 per cent and (-) 1.5 per cent, respectively, in June.
Aditi Nayar, Chief Economist, head of research and outreach at ICRA Ltd, said, “The core sector expansion slid to a 20 month low of 4.0% in June 2024, led by a moderation in growth or deepening contraction in five of the eight constituents, barring coal, fertilizers and cement, compared to May 2024.”
“With the onset of the monsoon, electricity growth reverted back to single digits after two months, while remaining healthy at 7.7 per cent. With the dip in the core sector growth, we expect the IIP to post a rise of 3.5-5.0 per cent in June 2024,” she added.
Q1 deficit at 8.1% of FY25 target
The Centre’s fiscal deficit reached 8.1 per cent of the full-year target by the end of April-June quarter of the financial year 2024-25. In absolute figures, this amounts to Rs 1,35,712 crore, as per data released by the Controller General of Accounts (CGA) on Wednesday.
A fiscal deficit represents the difference between the government’s expenditure and revenue. Deficit was registered at 25.3 per cent of the Budget Estimates (BE) in the same period of last fiscal. In the Union Budget, the government had declared that it would bring down the fiscal deficit to 4.9 per cent of the gross domestic product (GDP) in FY25.
The deficit was 5.6 per cent of the GDP in 2023-24. According to CGA, the net tax revenue stood at Rs 5,49,633 crore or 21.1 per cent of the BE in the first quarter of the current fiscal.