India’s FM: August Industrial Output ‘Disappointing’

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Oct. 12 – After rising 15.2 percent in July, output from India’s mines and factories slowed to just 5.6 percent in August, according to Ministry of Commerce and Industry data released on Tuesday.

India’s Finance Minister Pranab Mukherjee said that the sharp decline was “disappointing,” but added that he still expects average industrial growth in the current fiscal year ending March 2011 to be between 12 percent and 13 percent thanks to the labor-intensive manufacturing sector “doing well.”

Leading economists had anticipated a more robust growth figure of roughly 9.6 percent to 9.9 percent for India’s industrial output in August, so the surprising data has led to some debate regarding whether it is July’s strong growth or August’s weak growth that is the aberration.

“The extent of the slowdown is quite sharp and unexpected, though there’s a possibility that these numbers may get revised upward in due course,” Rupa Rege Nitsure, chief economist at Bank of Baroda, told The Wall Street Journal. “But the fact remains that growth tempo is easing, and we cannot remain overly optimistic about India’s cyclical upturn.”