Page last updated at 15:28 GMT, Tuesday, 12 February 2008

Indian industrial output up 7.6%

GM India plant at Halol
Manufacturing is the backbone of India's strong economic growth

Indian industrial output was up 7.6% in December on a year ago, official figures have shown.

The growth, led by manufacturing, was slightly ahead of expectations and better than a revised 5.1% in November.

Analysts broadly welcomed the latest figure, as it shows government efforts to slow breakneck economic growth are continuing to be successful.

India saw annual growth rates of above 10% in 2006 and the first half of 2007 before a number of interest rate rises.

'Soft landing'

While overall industrial output grew 7.6% in December, the manufacturing sector saw expansion of 8.4%.

"The numbers are slightly higher than our expectations and only shows [although] there is a deceleration in the growth rate it is not a marked one," said Sujan Hajra, chief economist at Anand Rathi Securities in Mumbai.

"The economy is going into a soft landing and this data will not have much bearing on the monetary policy stance barring a serious financial market contagion or a steep slowdown in the US."

The Indian government recently said it expected the economy to grow by 8.7% in the financial year to the end of March, which would be the slowest rate of expansion in three years.

The government has raised interest rates and reduced the amount of money banks can lend out to cool the industrial and financial sectors. The government is also predicting a slowdown in agricultural output.

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