India industrial growth falls, inflation nears 7-year low
Saturday, 14 March 2009
NEW DELHI, Mar 13 (AFP): India's industrial output fell for a second straight month, data showed Thursday, in what analysts said was more evidence the nation's once scorching growth is being hit by the global slump.
The January production figures came on the same day as other official data showed inflation fell to a near seven-year low, and analysts said deflation was at the most a few months away.
The slowing economy is grim news for the Congress government which hoped to vaunt its record of three years of nine per cent growth as it campaigns for elections that kick off in April but now faces opposition charges of creating a 'complete economic shambles'.
Factory and mine production contracted by 0.5 per cent from a year earlier in January after shrinking by 0.6 per cent in December.
The drop, coupled with the inflation decline to 2.43 per cent for the week ended February 28 from 3.03 per cent the previous week, could prompt further interest rate cuts by the central bank to jumpstart the economy, analysts said.
"The domestic sector is still pretty sluggish and will remain so for some time so I expect the central bank to continue its reduction in rates," DK Joshi, principal economist at Crisil ratings agency, told the news agency.
The January production figures came on the same day as other official data showed inflation fell to a near seven-year low, and analysts said deflation was at the most a few months away.
The slowing economy is grim news for the Congress government which hoped to vaunt its record of three years of nine per cent growth as it campaigns for elections that kick off in April but now faces opposition charges of creating a 'complete economic shambles'.
Factory and mine production contracted by 0.5 per cent from a year earlier in January after shrinking by 0.6 per cent in December.
The drop, coupled with the inflation decline to 2.43 per cent for the week ended February 28 from 3.03 per cent the previous week, could prompt further interest rate cuts by the central bank to jumpstart the economy, analysts said.
"The domestic sector is still pretty sluggish and will remain so for some time so I expect the central bank to continue its reduction in rates," DK Joshi, principal economist at Crisil ratings agency, told the news agency.