India’s industrial production increased for the first time in three months in January, thanks to a rebound in manufacturing output accounting for roughly three-fourths of the total industrial output. The data is likely to temper expectations of another rate cut after the central bank lowered the policy rate in January in response to the slowdown in economic growth to a decade-low in the third quarter of the fiscal year.
Industrial production increased 2.4 percent on an annual basis in January, reversing the 0.5 percent decrease seen in December, the Central Statistics Office said Tuesday. Economists had forecast a slower increase of 1.3 percent for January. December’s industrial output was initially estimated to have declined by 0.6 percent.
Driving the overall increase, manufacturing production advanced 2.7 percent year-over-year and electricity production climbed 6.4 percent. Meanwhile, mining output declined by 2.9 percent.
Among industrial sub-groups, production of basic goods rose 3.4 percent from a year earlier and intermediate goods production and consumer goods production moved up 2 percent and 2.8 percent respectively. Meanwhile, output of capital goods decreased 1.8 percent.
In the April 2012-January 2013 period, industrial output increased 1 percent from the corresponding period a year earlier, data showed.
The Reserve Bank of India lowered its benchmark interest rate by a quarter percent to 7.75 percent in January, marking the first cut in nine months, to give a much-needed boost to the economy after growth eased more-than-expected to 4.5 percent in the third quarter of the fiscal year.
January’s improved industrial performance underscores results from the latest purchasing managers’ survey, which revealed that the Indian manufacturing sector expanded at a faster rate in February, helped by robust growth in incoming orders.
In a separate release, the statistical office said consumer price inflation accelerated 10.91 percent in February from 10.79 percent in the previous month.
Another recent government report showed that India’s merchandise export increased 4.25 percent on an annual basis to $26.26 billion in February, helped mainly by higher shipments of engineering goods, rice, textiles and pharmaceutical and chemicals.
The Society of Indian Automobile Manufacturers said this week India’s car sales declined in February at the sharpest pace in more than 12 years as higher interest rates weighed on demand.
Finance Minister Palaniappan Chidambaram said in his budget speech that the economic growth rate is well below the potential 8 percent and getting back to that growth is the challenge that faces the country. The government forecasts 6.1 percent-6.7 percent GDP growth for 2013-14, following an estimated 5 percent expansion in the current fiscal.
by RTT Staff Writer
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