Infrastructure sector in limelight

The infrastructure sector’s performance in the 10 months of FY07 shows a much better picture. Leading the charge is the petroleum refining sector, which has churned out 12.2% more in Apr ’06-Jan’07 than in the same period last year.

The commissioning of the Essar and IOC refineries seem to have contributed to this healthy growth. In crude petroleum, production has increased by 5.9%, while it had declined by 5.8% last year. This was mainly due to the accident at ONGC’s field, which affected production in FY06. Coal and electricity are two vital energy inputs, where there has been a mixed performance.

Coal production growth has slowed down to 5.2% from 6.4%, though production in January was up 10%, the best performance in six months. If current levels are sustained, the year might end up with coal production showing higher, rather than lower growth over the previous year. Power, a major bottleneck in most states, has done quite well in FY07, power cuts and all, with generation up 7.6% compared to 4.9%.

There are two smudges in an otherwise good performance. Cement and steel are not exactly infrastructure sectors, but are basic industrial materials. Growth has slowed down during FY07 with steel production growing by 9.8% compared to 11.1% and cement production growing by 9.5% compared to 11.4%.

The tight supply situation, especially in cement, has been one of the reasons why prices have been shooting through the roof.