NEW DELHI: The eight key infrastructure sectors continued a recovery in July, driven largely by a robust expansion in steel, cement, natural gas, coal and electricity, prompting economists to say that the government’s infrastructure push and a low base had helped.
Data released by the department for promotion of industry and internal trade (DPIIT) on Tuesday showed the eight core sectors — spanning coals, crude oil, natural gas, petroleum & refinery products, fertilisers, steel, cement and electricity — rose an annual 9.4% in July compared to a contraction of 7.6% in the same month last year and marginally higher than the previous month’s 9.3% expansion. This is the fifth consecutive month that the sector has maintained its growth momentum.
“Based on this growth rate of 9.4%, we can expect IIP growth in July to be between 12-14%,” said Madan Sabnavis, chief economist at Care Ratings.
Separate data showed the fiscal deficit at the end of July was at Rs 3.2 lakh crore or 21.3% of the full year target. In the corresponding period of last year it was at 103.1% of the full year target.
Revenue receipts were up 34.2% at the end of July compared to 12.4% in the corresponding period of last year. Revenues have been robust this year on the back of the strong recovery displayed by some sectors of the economy.
“With a healthy rise in receipts amidst a discouraging decline in total spending driven by the non-interest non-subsidy component of revenue expenditure, the GoI’s fiscal deficit printed at a modest Rs 3.2 trillion ( Rs 3.2 lakh crore) in April-July 2021, relative to the year-ago level of Rs 8.2 trillion recorded amidst the first wave of Covid-19, as well as the pre-Covid level of Rs. 5.5 trillion,” said Aditi Nayar, principal economist at ICRA.
“With low receipts of Rs 8,371 crore so far, it is likely that the disinvestment target of Rs 1.75 lakh crore will be missed by a considerable margin, causing the GoI’s fiscal deficit to overshoot the FY2022 BE. Moreover, if other major fiscal stimulus measures are announced, and the outlay for vaccine procurement is raised above the budgeted Rs 350 billion, it could cause the fiscal deficit to widen,” said Nayar.
