India's core sector grew 4.1 per cent year-on-year in January boosted by healthy cement sector performance, a government statement said on Monday.

The rise was lower than the 7.1 per cent growth in January 2002 and almost at the same level as last month's 4.2 per cent.

The infrastructure sector -- spanning the six core industries of crude petroleum, refining, coal, electricity, cement and steel -- accounts for more than a quarter of India's industrial output, often serving as an advance indicator of industrial growth.

It grew 5.2 per cent between April and January, up from 3.1 per cent a year earlier.

The core sector has been posting reasonably strong growth because of an increase in construction activity in Asia's third largest economy due to cheaper loans, falling real estate prices and tax breaks for the housing sector.

Interest rates have been on the decline after the Reserve Bank of India cut the benchmark bank rate in October last year to a 29-year-low of 6.25 per cent to insulate the world's 12th-largest economy from the impact of the country's worst drought in 15 years.

The cement sector, which has fuelled growth in previous months, grew 9.2 per cent in January compared with a rise of 15.8 per cent in the same month a year earlier.

The steel sector grew 4.5 per cent in January against 13.4 per cent in the previous year. Between April and January, the sector grew 7.7 per cent compared with 3.5 per cent in the year-ago period.

Analysts say the government's ambitious highway project to link the four corners of the vast country has fuelled demand for steel and cement.

The electricity sector, which accounts for nearly 40 per cent of the infrastructure index, grew 4.0 per cent in January, the same as the January 2002 figure.

The only laggard was the coal sector which shrank by 0.6 per cent compared to a growth of 5.2 per cent in the same month a year ago.

The petroleum refining sector grew 9.2 per cent in January, compared with a rise of 9.9 per cent in the same month of 2002, while the crude oil sector grew a meagre 0.4 per cent, after contracting 1.4 per cent in the same month in the preceding year.