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November 12, 2010    

Indian industrial output growth slows

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by Kay Murchie

Figures published today revealed a slowdown in industrial output in India - which fell to a 16-month low.

India’s statistics office said output grew 4.4% on an annualised basis in September - less than expected and down from August’s 6.9% growth.

Federal finance minister, Pranab Mukherjee, described the industrial slowdown as a “matter of concern” and the figure fell far short of the 7% expected by analysts.

Industrial production was dragged lower by manufacturing, which grew 4.5% in September after rising 7.5% in August.

Meanwhile, mining output was up 5.3%, while electricity production grew 1.7%.

India’s factory output is way behind China’s, which showed a 13.1% year-on-year growth in October, according to figures published earlier this week.

Earlier this month, the Reserve Bank of India (RBI) raised rates for the sixth time since the start of the year, in a bid to tame stubbornly high inflation in a thriving economy.

The RBI raised the repo rate, the rate at which it lends to commercial banks, to 6.25%.
India’s inflation rate, which is the highest among the Group of 20 leading nations, has risen due to soaring food costs.

Annual food inflation has surged, causing major problems for the 450 million people who live below the poverty line.

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