India's Industrial Output Rebounds Despite Aggressive Tightening

Increased 7%

India's industrial output rebounded in April from the previous month, data showed June 11, suggesting the economy was still growing robustly despite aggressive monetary tightening, economists said. Industrial production grew by 7% in April from a year earlier, after expanding by just 3.9% in March.

The data came after the central bank late on June 10 raised a key short-term borrowing rate by a quarter percentage point to 8% to battle inflation that analysts say is headed to double-digit levels. Analysts said the surprisingly strong industrial output numbers on top of solid quarterly GDP growth gave the bank more leeway to tighten monetary policy further to fight inflation without badly hurting economic growth.

Annual GDP growth was 8.8% in the fourth quarter to March, underpinned by strong construction and investment.

Analysts say inflation could rise in coming weeks to 10% or higher following last week's sharp hike in state-set fuel prices.

Copyright Agence France-Presse, 2008

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