India's Manufacturing Output Increased 17.9%

Stimulus packages and lower interest rates spurred demand for consumer durables, cement and steel.

Asia's third-largest economy surges ahead in January as industrial output rose by 16.7%, official data showed on March 12.

Manufacturing output, which comprises the bulk of the industrial production index, rose 17.9% from a year earlier, as stimulus packages and lower interest rates spurred demand for consumer durables, cement and steel.

The mining sector output grew by 14.6% while electricity rose by 5.6%.

Demand for basic goods grew by 10.7% while for intermediate goods by 21.3%.

"The data shows no surprise, we see strong growth. But the risk is if inflation climbs too fast," said credit rating agency Crisil's principal economist Dharmakirti Joshi. "The central bank may need to act quickly and raise rates."

Indian inflation is widely expected to move into double digits in coming months, after posting 8.56% for the month of January.

Last month, the Congress-led government started rolling back some stimulus measures that helped shield the economy from the worst of the global downturn, indicating it was confident of a sustained recovery. But industrialists have urged the government to err on the side of caution, warning that any knee-jerk reaction would affect the upwards momentum. "For growth to be maintained and rise further, we need to keep some stimulus measures going," said Anjan Roy, economic adviser with the Federation of Indian Chambers of Commerce and Industry.

Finance Minister Pranab Mukherjee has said the economy is forecast to grow 8.75% next year after expanding by at least 7.2% this year.

Copyright Agence France-Presse, 2010

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