A slowdown in the manufacturing sector pulled down India's industrial growth in June to 5.4 per cent from 8.9 per cent a year ago, but consumer sector nursed its way back to health growing 10 per cent.
Growth in manufacturing sector, which accounts for over two-third of the Index of Industrial Production, fell drastically to 5.9 per cent from 9.7 per cent a year ago.
Manufacturing exhibited a similar trend in the first quarter as well, growing by a poor 5.6 per cent compared with 11.1 per cent last year.
The only silver lining was that consumer durables growth gathered momentum in June registering a growth of 3.5 per cent against a negative growth of 3.6 per cent last year, pushing up the overall consumer sector growth to 10 per cent.
Electricity sector growth fell to 2.6 per cent against 6.8 per cent a year ago, while mining sector bounced back to post 2.9 per cent growth compared with 1.5 per cent.
Infrastructure growth slows down in June
The growth in six core infrastructure industries slowed down to 3.4 per cent in June, against 5.2 per cent in the year-ago period owing to dismal performance of all but one sector -- coal.
During the April-June quarter of the current fiscal, the growth rate of the six core industries -- crude oil, petroleum refinery products, cement, finished steel, coal and electricity -- declined to 3.5 per cent against 6.4 per cent during the same period last fiscal.
According to official data released on Tuesday, only coal sector posted a growth of 6.2 per cent against 0.9 per cent in the year-ago period.
All others that make up the core infrastructure list declined. Crude oil production registered a negative growth of 4.7 per cent, petroleum refinery products and cement declined to 5.6 per cent and 3.8 per cent respectively, finished steel production also slowed down to 4.4 per cent and electricity generation fell to 2.6 per cent.
For the April-June 2007-08, barring coal, all the five infrastructure industries registered a decline in growth.
While crude oil production recorded a negative growth of 0.2 per cent during 2008-09, compared to 0.7 per cent in the same period last year.
Growth in petroleum refinery declined to 3.3 per cent from 13.3 per cent in April-June 2007-08.
Electricity generation and cement production registered a decline of 2 per cent and 5.8 per cent, against 8.3 per cent and 7.2 per cent, respectively.
Growth in finished steel stood at 4.5 per cent during the April-June 2008-09 as compared to 5.4 per cent during the same period of 2007-08.
However, coal registered a positive growth of 8.4 per cent, compared to 0.6 per cent in 2007-08.
Economists' take on India's growth
Inferring from the Q1 data of industrial growth, economists believe that economic growth this fiscal would moderate at below 8 per cent level against 9.1 per cent in 2007-08.
"Economic growth is likely to be 7.7 per cent this fiscal. It is unlikely to be more than this, though it may fall below," HDFC Chief Economist Abheek Barua told PTI.
Standard and Poor's Chief Economist for Asia Pacific Subir Gokaran said the rating agency's forecast of 7.8 per cent GDP growth for this year takes into account the pattern in the industry and the industrial slowdown is not surprising.
"Interest rates have moved up and there has been a slowdown in exports to US, rest of Asia and cost of fuel has increased, slowing down the manufacturing sector," Barua said.
Consumer durables sector, which was a cause of concern for the government till recently, however, revived.
However, economists could not explain the revival. "This phenomenon is puzzling. Retail credit has slowed down. There is a huge anomaly," Barua said.