The Infrastructure Sector in India: A Steady Growth in May 2024

The infrastructure sector in India has shown steady growth in May 2024, with key sectors such as coal, natural gas, refinery products, steel, and electricity contributing to this positive trend. However, three sectors – crude oil, fertilisers, and cement – experienced a contraction due to sluggish demand and base effect.

According to data released by the commerce and industry ministry, the infrastructure sector, which includes coal, crude oil, natural gas, refinery products, fertilisers, steel, cement, and electricity, recorded an annual growth of 6.3% in May. While this growth was slightly slower than the previous month’s expansion of 6.7%, it was higher than the 5.2% growth recorded in May 2023. This marks the fourth consecutive month that growth has remained above 6%.

The electricity sector saw significant growth in May, with a 12.8% increase compared to 10.2% in April and 0.8% in May last year. The steel sector also performed well, rising by 7.6% in May. However, the crude oil sector contracted by 1.1%, while fertilisers and cement declined by 1.7% and 0.8%, respectively.

Aditi Nayar, chief economist at ratings agency Icra, commented on the sector’s performance, stating that while growth has sustained above 6% for four months in a row, it eased slightly to 6.3% in May 2024. She attributed this slight slowdown to factors such as the heatwave and phased Parliamentary Elections, which may have impacted activity and execution in some sectors. Nayar expects the Index of Industrial Production (IIP) growth to be in the range of 4-5% in May 2024.