NEW DELHI -- Dampening hopes that Asia's third-largest economy could be on the upswing, India's industrial output slipped by a surprise 0.6% in December from a year earlier, data showed on Tuesday.
The fall in output of India's factories, mines and utilities, undershot market expectations of a 0.8% rise tipped in a Dow Jones Newswires poll. Industrial production shrank a revised 0.8% in November.
The weak figures deal another blow to the scandal-tainted government of Prime Minister Manmohan Singh, who has been keen to revive the economy with his Congress-led administration facing elections in 2014.
The Index of Industrial Production was dragged down mainly by a contraction in manufacturing output, which slipped 0.7% in December from the same month a year earlier. Manufacturing holds a 75% weight in the index.
"Industrial activity remains lackluster," said Jyoti Narasimhan, senior India economist at IHS Global Insight, an international economic research house.
"A sustained manufacturing revival is still not around the corner," Narasimhan said, noting a 12.45% plunge in auto sales in January from a year earlier, which was announced on Monday.
The passenger car sector -- seen as a key barometer of economic health -- is expected to post negative sales growth in the current financial year to March 2013 for the first time in a decade, according to a leading industry body.
The weak figures have come as the government is under pressure to introduce steps to reinvigorate the economy in its budget due at the end of the month at the same time as keep a lid on spending to contain a ballooning fiscal deficit.
The government's statistics office last week forecast that India's once booming economy would grow by 5% in this financial year. Finance Minster P. Chidambaram has said he expects growth to be closer to 5.5% but in either case it would be the weakest expansion pace in a decade.
India's economy has been hit by years of high interest rates aimed at taming stubbornly strong inflation that still is running at more than 7%, while exports continue to fall and investment is slowing.
With India striving to avert a ratings agency downgrade of its sovereign debt to junk status, the government has announced a string of reforms, opening up the retail and other sectors to more foreign investment.
Copyright Agence France-Presse, 2013