Indian Industrial Production Surges

May 11, 2007
Increases 13%

India's industrial production growth unexpectedly surged by nearly 13% in March, according to data released May 11, but falling inflation could keep interest rates on hold, economists said. Output expanded by 12.9% from the same month a year earlier in Asia's fourth-largest economy, beating economists' expectations of a 10.4% rise, despite aggressive monetary tightening aimed at cooling the economy.

Industrial output, which has been climbing on the back of strong consumer demand, expanded by an annual 10.8% in February.

But inflation, which has emerged as a major political issue because of its burden on India's millions of poor households, slipped fell by a tenth of a percentage point to 5.66%, data also released on May 11 showed. Prices of food staples such as barley, wheat and poultry all declined as headline inflation fell for a second straight week to its lowest level in 2007. The latest figures came two weeks after global ratings agency Moody's warned that India's economy was showing "classic signs" of overheating with "higher than acceptable" inflation coupled with strong growth and a credit boom.

Manufacturing output, which accounts for over three-quarters of industrial output, climbed by 14.1% in March.

Copyright Agence France-Presse, 2007

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