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India Infrastructure Output Contracts First Time in Over 4 Years

The index of eight core infrastructure industries fell 0.5% in August. It had last declined in April 2015.

India Infrastructure Output Contracts First Time in Over 4 Years
Workers stand and sit in a trench at an under construction sewerage system on the Delhi-Mumbai Industrial Corridor. (Photographer: Anindito Mukherjee/Bloomberg)  

(Bloomberg) -- India’s core infrastructure industries’ output contracted for the first time in more than four years in August, reflecting weak demand in the economy.

The index of eight core infrastructure industries, which comprises output of coal, crude oil, cement and electricity among others, fell 0.5% in August. It had last declined in April 2015.

Key Insights

  • The overall output was weighed down by a contraction in coal (-8.6%), crude oil (-5.4%), cement (-4.9%), natural gas (-3.9%), electricity (-2.9%). Steel production expanded 5%, fertilizers by 2.9% and refinery products by 2.6%
  • The core infrastructure sector constitutes 40% of total industrial production and the weakness will be a drag on factory output, data for which is due on Oct. 11
  • The core data comes few days before the central bank’s monetary policy where it is expected to cut rates for a fifth time to spur growth

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To contact the reporter on this story: Vrishti Beniwal in New Delhi at vbeniwal1@bloomberg.net

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Karthikeyan Sundaram, Subramaniam Sharma

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