Nov industrial output up 2.7% YoY
India's industrial output in November rose a slower-than-expected 2.7% from a year earlier, well below the previous month's revised annual growth of 11.3%, government data showed on Wednesday.
January 12, 2011 / 11:57 IST
India's industrial output in November rose a slower-than-expected 2.7% from a year earlier, well below the previous month's revised annual growth of 11.3%, government data showed on Wednesday.
The median forecast in a Reuters poll was for an annual rise of 6.6%.Manufacturing output , which constitutes about 80% of the industrial production, rose an annual 2.3% in November, the federal statistics office said in a statement.Industrial output rose 10.4% in the 2009-10 financial year (April-March) , faster than the 2.8% clocked in the previous fiscal year.Market reaction:The partially convertible rupee weakened to 45.18 per dollar, from 45.14 before the data.The main share index extended losses to as much as 0.6% immediately after the data from being just marginally lower beforehand.The benchmark 10-year bond yield and the most-traded 8.08% 2022 bond both eased 1 basis point each, to 8.19% and 8.18% respectively.The one-year swap rate shed 2 basis points to 7.28% while the five-year swap eased 1 basis point to 7.94%.Background:India's domestically driven economy grew 8.9% for the first two consecutive quarters of fiscal year 2010-11 on higher consumption, with the government forecasting higher growth in the third and fourth quarters of the fiscal year ending March.The government has said annual economic growth in the current fiscal year to end-March could exceed 9%.The HSBC Markit Purchasing Managers' Index, an indicator of manufacturing activity, expanded in December for the 21st straight month but at a slower pace than in November. Annual car sales in India rose nearly 29% in December, reflecting a robust consumer demand in the economy.However, rising consumption and slowdown in investment point to potential inflationary risks.The wholesale price index eased to a one-year low of 7.48% in November from an annual rise of 8.58% in October, but with food inflation surging to more than 18% analysts expect inflation to rise again in December.The government decided last month to defer hike in diesel and cooking fuel prices until the headline inflation subsides.Inflation could remain at around 7% by end-March, well above the central bank's projection of 5.5% as well as government's earlier estimates, Montek Singh Ahluwalia, an adviser to Prime Minister Manmohan Singh said this week.Last week, Reserve Bank of India Governor Duvvuri Subbarao said a pause in its tightening cycle should be interpreted as a comma and not a full stop, indicating further monetary policy tightening going ahead.The RBI raised key lending and borrowing rates six times last year, and is widely expected to raise rates by 25 basis points each again when it reviews monetary policy on January 25. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
