Growth in overall infrastructure slowed down to 2.4 per cent in the first quarter (April to June) of FY16 from 6 per cent in the comparable period of FY15. The index is made up of eight commodities—coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity. In the first quarter of FY16, all commodities, except crude oil and natural gas, showed positive growth. The best performance was seen in coal with production clocking a 7.3 per cent increase, which was over and above the 6.6 per cent growth seen in the first quarter of FY15. Overall infrastructure performance was dampened by the sluggish growth of only 1.5 per cent in electricity generation. Electricity has a weight of 10.316 per cent in the overall Index of Industrial Production and 27.217 per cent within the Infrastructure Index. However, the depressed growth in electricity generation must also be seen against the fact that in the first quarter of FY15, power generation was up by as much as 11.3 per cent.
Production of natural gas has shown a consistent decline in each of the years FY12 to FY15. The declining trend persisted in the first quarter of FY16 as well. However, the impact of natural gas on the overall infrastructure index is restricted by the fact that this commodity accounts for only 4.506 per cent weight within the infrastructure index.
The infrastructure index grew by 3.8 per cent in FY15, which was lower than the 4.2 per cent growth seen in FY15. In the years from FY11 to FY14, the index showed an average growth of 6 per cent. It is worth observing that in the first half of FY15, the infrastructure index had grown by 6 per cent but the year closed with a 3.8 per cent growth. This suggests that performance had worsened in the second half. The second half (October to March) of the current year, FY16, therefore, has the “low base” advantage and is likely to show higher growth, at least from a statistical perspective.
The eight infrastructure industries account for nearly 38 per cent weight in the overall index of industrial production. The infrastructure index is therefore an efficient forerunner of trends in the overall industry.