Source AP ©

India shows good industrial growth

Demand for manufactured goods and improved mining output in India made country’s industrial production grow by 11 percent in February, officials said.

The industrial growth and a good agricultural harvest were expected to help the broader economy sustain the momentum seen in recent years.

The government expects the economy to register 9.2 percent growth in the fiscal year ended March 31, making it one of the world's fastest-growing economies.

"This data gives the confidence that the 9.2 percent gross domestic product growth will be achieved," said D.K. Joshi, an economist at credit rating firm CRISIL Ltd.

According to the update released Thursday, industrial growth averaged 11.1 percent in the first 11 months of India's last April-March fiscal year.

Among industries, manufacturing output grew 12.3 percent in February compared with 9.2 percent in the same month a year ago.

Mining production expanded 6.3 percent in February from last year, while electricity generation was up 3.3 percent.

The growth numbers were in line with analysts' expectations, but added to worries that the economy might be overheating.

The industrial output growth came despite a slowing of exports in recent months, meaning the growth momentum was sustained largely by domestic demand.

Rising middle class incomes have boosted consumer spending on goods such as cars, telephones and television sets, and encouraged companies to invest in new projects.

But these have also fueled inflation, which hit a two-year high of 6.7 per cent on Feb.17.

The inflation rise has prompted the central bank to repeatedly increase interest rates in a bid to cool the economy. Analysts said Thursday's data could set off another round of rate hikes.

"The latest data show that previous rounds of tightening haven't dented industrial growth," Joshi said.

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