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Industrial output in Inda up slightly
This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Mumbai, India • India's industrial production showed an unexpected, if slight, uptick of 0.1 percent last month, ending a three-month fall, as elections loom in the world's most populous democracy.

Figures released Wednesday also showed consumer inflation eased to 8.1 percent in February, still considered high but a welcome relief from the double-digit levels of a few months ago.

Both trends were welcome news for Asia's third-largest economy. India's lowest economic growth rates in a decade have coincided with soaring prices over the past year, making it difficult for the central bank to try to stimulate growth by cutting interest rates.

Still, the sputtering economy is likely to hurt the ruling coalition government led by the Congress party heading into elections beginning April 7. The opposition Bharatiya Janata Party, a pro-business, Hindu nationalist bloc led by Narendra Modi, has the momentum.

While the February industrial output data beat analysts' prediction of a contraction, the level of growth was still decidedly weak. Expansion of 6.5 percent in the electricity sector led the overall numbers, while mining production grew by 0.7 percent over the previous year and manufacturing fell by 0.7 percent.

The small expansion is unlikely to add much steam to India's economy. Growth decelerated to 4.7 percent in the most recent quarter, far below the 8 percent the country had averaged for a decade.

However, the Consumer Price Index measure of inflation also showed improvement over the 8.7 percent level of the previous month as the rising price of vegetables slowed somewhat. Food inflation is of particular concern in India, where hundreds of millions of people live on $2 per day or less and spend most of their incomes on food.

The positive trend on inflation could give the Reserve Bank of India room to lower interest rates to encourage investment and spending at its next meeting on April 1. Another indicator of inflation, the Wholesale Price Index, is due on Friday.

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