Indian Industrial Growth Slows to 3.6%

Manufacturing grew 3.5% compared to 16.1% last year.

Coming in below analyst forecasts and far down on its 2010 peaks, India's industrial output growth slowed to 3.6% from a year earlier in February, official data showed on April 11.

February's output was less than January's revised 3.95% annual growth and substantially lower than its 15.1% expansion in February 2010, when Asia's third-largest economy was emerging from the global downturn.

Analysts had expected India's industrial growth in February to be around 5.2%.

The below-expectation output comes after eight interest rate hikes in 12 months to tame stubborn inflation -- the most aggressive monetary tightening in Asia -- prompted manufacturers to scale back production.

Manufacturing output, which accounts for 80% of the industrial index, rose 3.5% in February, down from 16.1% growth a year earlier.

India's output performance contrasted with neighboring China's industrial production, which expanded by 14.1% in the first two months of the year, compared with the same period in 2010.

India's government expects the economy to expand by 9% this fiscal year, ending in March 2012, beating the previous year's 8.6% growth.

But private economists say expansion may slacken to as low as 7.2% as resurgent oil prices, a stronger currency and further rate hikes take their toll.

Such growth is high by Western standards but it is far below the double-digit levels India's government says are needed to raise living standards of the country's impoverished millions.

Copyright Agence France-Presse, 2011

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