Agence France-Presse . New Delhi

India's industrial production growth slid sharply in November due to a big decline in manufacturing, official data showed Friday, while inflation remained steady at 3.5 per cent.

But economists expected no early easing of interest rates due to soaring world oil and commodity prices.

Industrial output growth slowed to 5.3 per cent in November from 15.4 per cent in the same month a year earlier, the Central Statistical Organisation said.

Manufacturing growth plunged to 5.4 per cent from 17.2 per cent a year earlier, the data showed.

Industrial growth has shown a steady decline in the current fiscal year to March 31, 2008 except for a spike in October on the back of a boost in production for India's free-spending festival season.

Production growth dropped to 9.2 per cent from April to November from 10.9 per cent in the same period for the financial year that ended in March 2007.

Aggressive monetary tightening, which has raised loan costs, is expected to keep dampening growth in coming months.

The central bank has forecast economic growth will slow to 8.5 per cent in the current fiscal year from 9.4 per cent the previous year.

Industrial production represents about a fifth of India's GDP.

Meanwhile, annual inflation remained unchanged at 3.5 per cent for the week ended December 29, according to the wholesale price index, India's most watched cost-of-living monitor, separate official data released showed Friday.

Inflation has fluctuated in recent weeks but stayed well below the central bank's target of close to five percent for this fiscal year.

Inflation stood at 5.89 percent a year ago.

The low inflation is expected to give more headroom to the central Reserve Bank of India to signal a move towards softer interest rates when it reviews its monetary policy later this month.

But 'despite the low inflation rate the Reserve Bank may hold interest rates for some time due to concerns over rising international crude oil and food prices,' HDFC Chief Economist Abheek Baruah told the Press Trust of India.

The central bank has hiked interest rates nine times since 2004 to curb inflation.

 

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