By P Raghavan, Indian Express Finance
The performance of the infrastructure has slackened sizably over the first eight months of the fiscal year. All the four major components of infrastructure; energy, transport, roads and telecommunications have taken a hit as GDP growth slumped from 9% in 2007-08 to just 7.1% in 2008-09, as per the advanced estimate of the Central Statistical Organisation. The only segments that showed some resilience across the 15 major sub-segments were coal and natural gas in the energy sector and exports through air cargo in the transport sector. In the remaining 11 sub-segments, growth slowed in nine, while the output shrunk in the remaining three.
The overall record was comparatively better in the energy segment where the pick up in coal and natural gas segments offered some relief. The substantial gains were in the output of coal where growth doubled to 8.6% in the April-October 2008 as compared to the 4.3% gain in the corresponding period of the previous year. The gains were more limited in the natural gas segment where growth picked up from 2.6% in April-November 2007 to 3.3% in April-November 2008. The opening up of these segments to private sector investments seems to have helped contribute to some of these gains.
The energy sectors which registered substantial slowdown were electricity generation and oil refining. The deceleration of growth was substantial in electricity where growth of generation slowed down by more than half from 7% in April-November 2007 to just 2.8% in April-November 2008. Oil refining was similarly hit with the growth of processing cut down from 8.3% to 3.8% over the period. While domestic factors would account for most of the decline in energy generation, the slowdown in exports would have also contributed to the deceleration of refining output. The worst hit sector was the crude oil segment where the output declined marginally by 0.6% during the first eight months of the year. The increased private sector investments in oil exploration are yet to change the fortunes of the crude oil segment.
Of the six main sub-segments of the transport sector, growth picked up only in air cargo exports. It slowed down in four, namely railway freight, port cargo, air cargo imports and also in international air passenger segment. The worst hit sector in the transport segment was the domestic air passenger segment where business declined by more than 10.4% in April-November 2008, a sharp slump as compared to the 25.9% gain in the corresponding period of the previous year.
Of the four sub-segments going through a slowdown in the transport sector, the worst affected was port cargo and imports through air cargo. The numbers show that growth of port cargo slumped by more than a third with the pace decelerating from 13.2% in April-November 2007 to just 3.9% in April-November 2008, no doubt aided by the sharp slump in international trade, which has also pushed down growth of imports through air cargo from 22.3% last year to just 2.4% in the current year. The experience has been similar in the international air passenger traffic where growth slowed down by almost half from 13.4% to 7.1% during the period.
The impact of the overall slowdown seems to have had a more benign impact on the railways where the freight traffic only slowed down more mildly from 8.1% in April-November 2007 to 6.5% in April-November 2008. This indicates that the railways will find it difficult to meet the freight growth target of 7.6% in the current fiscal year.
The only relief in the road sector was the pick up in the additions made by the National Highways Authority Of India, which widened, strengthened and laid 1,384 km of roads in April-November 2008, which is a substantial improvement over the 813 km done in the previous year. However, the kilometres added by National Highways Organisation and BRDB slowed down by a third from 1,023 km to 712 km during the period.
Though the telecom sector has been in the news with large additions to the networks in the recent months, the numbers till November show that the growth has slowed down both in the landline and the cellular phone segments. While the growth of the landline segments decelerated from 83.7% in April-November 2007 to just 25.6% in April-November 2008, cutting growth by almost two third, the additions to the cellular networks slowed down from 44.6% to just 24.8% during the period.
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TCS saw project cancellations in past 4 weeks - CLSA
MUMBAI (Reuters) - India's top software services exporter, Tata Consultancy Services , has seen project cancellations in the last four weeks, brokerage CLSA Asia-Pacific Markets said in a client note, citing a senior TCS official.
The company sees the slowdown in demand bottoming out in the March '09 quarter and expects a recovery in the June '09 quarter, the report said, quoting TCS Chief Financial Officer S Mahalingam.
A TCS spokeswoman confirmed Mahalingam spoke at the brokerage's Asia Investors' Forum at Las Vegas on Monday, but declined to comment on the CLSA note.
The company is also confident of growth in fiscal year 2010, said CLSA, which has an "underperform" rating on TCS.
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Mahindra, Australian firms in small plane talks
MUMBAI (Reuters) - The auto components arm of Indian utility vehicle maker Mahindra & Mahindra is in advanced talks with two Australian aerospace companies to make small aircrafts, the Mint reported on Tuesday.
The newspaper said Mahindra Systech is looking to acquire one aircraft component firm and is seeking a joint venture with the other to build eight and 14 seater planes, citing a senior group official.
"If we get it right, aerospace can do for Mahindra what Scorpia did," the paper quoted Hemant Luthra, president, systems and technologies at Mahindra & Mahindra as saying.
Scorpia is Mahindra's sport utility vehicle.
Luthra declined to name the Australian firms, but said one of them has been supplying components to Airbus and Boeing Co.
"If this deal goes through we will actually have something in hand that we can show the Boeings and Airbus of the world that this is our off-set capability," he told the paper.
Under India's off-set policy, foreign firms are required to source locally at least 30 percent of the value of defence equipment contracts exceeding 3 billion rupees, it said.
Luthra said the acquisition would be finalised in the first half of 2009, while the joint venture could be decided in a few weeks.
Mahindra & Mahindra could not be immediately reached for comment.
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