Core sector grows 9.6% as steel, cement hold ground

Driven by finished steel and cement production, core infrastructure industries grew by a healthy 9.6% in March 2008, although the overall growth of industry was a mere 3% in the same month.Even though the growth of six core industries- crude oil, cement, electricity, coal, petroleum refinery products and finished steel-in March this year was less than the 10.5% a year ago, it was encouraging, given the dismal industrial growth.So far as the whole of 2007-08 is concerned, growth in these six areas declined to 5.6% in fiscal 2007-08 from 9.2% in the previous year.In March 2008, three of the six core industries, however, performed badly as crude oil production declined by 0.35%, petroleum refinery output remained stagnant and electricity generation grew by just 3.6% in March compared to 8%a year ago.It was mainly finished steel and cement, which pushed up the growth of six infrastructure industries in March. Finished steel production grew by 21.8% from 16.6%, while cement output rose by 9.3 from 5.5%.Coal production growth dipped by 9.3 from 10.6% during the month. HDFC bank Chief Economist Abheek Barua said, "The growth in core industries will partially offset the negative sentiment built around the IIP"."However, the overall performance is skewed toward just two sectors - cement and steel," he said, adding that this reflects the chronic problem that should be addressed."Measures like cut in interest rates offer a temporary solution," Barua said, pointing out that there are problems of funding and policy in these sectors which hopefully will get addressed.