Key Infrastructure Sectors Witness Sharp Decline in August 2024

The production of eight key infrastructure sectors fell by 1.8% in August 2024, driven by declines in coal, crude oil, natural gas, refinery products, cement, and electricity output. This marks the first contraction in 42 months. Excess rainfall and an elevated base from the previous year were significant factors.

In a notable economic downturn, the production of eight key infrastructure sectors fell into the negative zone for the first time in 42 months, contracting by 1.8% in August 2024. This decline was driven by drops in coal, crude oil, natural gas, refinery products, cement, and electricity output.

Official data, released on Monday, revealed that the growth rate had been 6.1% in July, contrasting sharply with a 13.4% growth in August 2023. During April to August of the current fiscal year, the output of core sectors increased by 4.6% compared to 8% over the same period last year.

Ratings agency Icra attributed the decline to excess rainfall impacting mining activities and an elevated base from the previous year. Chief Economist Aditi Nayar warned that core sector output might remain lacklustre in September due to the late withdrawal of the monsoon before normalizing in the third quarter.