Posted on 13 Jan 2010
Industrial output rose 11.7% in November from a year earlier, higher than the median forecast of an annual rise of 10% in a Reuters poll and an unrevised 10.3% rise in October, data showed yesterday.
The growth was the fastest since October 2007, when the industry grew an annual 12.2%.
Factory output in November, which had expanded just 2.5% in the same month last year, is riding a revival in consumer demand following aggressive rate cuts by the central bank and stimulus through tax breaks after the global downturn.
“This number, combined with an expected 7.3% wholesale price index inflation for December, would strengthen the case for monetary tightening by the Reserve Bank of India (RBI),” said Gaurav Kapur, senior economist at ABN Amro Bank.
“The central bank may wait until the third-quarter GDP release due end of February for hiking policy rates, but is likely to start withdrawing liquidity through a 50-basis points CRR (cash reserve ratio) hike in the Jan 29th policy review.”
Back pay of about 180 billion rupees (US$3.96bil) to federal government workers in October, the second instalment of a wage pact agreed in 2008, has also helped shore up consumers’ purchasing power.
A private survey found last week the December purchasing managers’ index showed the pace of manufacturing activity jumped to its highest since May on sharp rises in new work and output, while car sales in December rose an annual 40.3%.
Analysts say the rising trend in
“The headline IP (industrial production) number is much higher than expected, but it may be the last double-digit growth number for the current financial year,’ said ABN’s Kapur.
