New Delhi: India is witnessing a listless growth in electricity demand, possibly signaling more slowdown in the economy.
Electricity requirement from distribution utilities in February rose 1.3 per cent from a year earlier and barely changed from January's 1.1 per cent, the weakest growth in two years, according to the Central Electricity Authority. Data for power generation, a proxy for demand, showed the weakness continued into March.
The trend points to a lack of appetite among factories and commercial firms —which consume about half the country's electricity—ahead of government data on industrial production for February that's due on Friday. Uncertainty about the outcome of a national election beginning Thursday, weak domestic demand and a global slowdown have clouded India's economy.
Economic growth slowed to 6.6 per cent in the three months to December, the weakest pace in six quarters. The IMF on Tuesday cut the nation's growth outlook for this year to 7.3 per cent from 7.5 per cent seen in January.
"The industry is not growing at a fast pace," said Devendra Kumar Pant, Chief Economist, at India Ratings and Resear-ch, the local unit of Fitch Group. "All leading indicators suggest sluggishness in industrial activities will continue for some time."
Core infrastructure sector, which constitutes 40 per cent of total industrial production, grew 2.1 per cent in February, marginally improving from January's 19-month low of 1.8 per cent when electricity generation and production of refinery products contracted.
While factory output data for March, which is published with a one-month lag, is due in May, early indicators point to a steepening slowdown. Passenger vehicle sales have contracted for five straight months to March, while exports has been sluggish.