Industrial growth down from July, up 9.9 % y-o-y

Industrial production in August rose 9.7 per cent from a year earlier, below expectations for a 9.9 per cent increase and slowing from the July's annual growth of 12.7 per cent. The growth was 7.6 per cent in the same month last fiscal.

Riding on the back of an upsurge in manufacturing, the cumulative industrial production during April-August this year increased by 10.6 per cent as against 8.7 per cent in the corresponding period of 2005-06.

India's industrial production slowed in August from a breakneck annual rate in the previous month as monsoon flooding hurt output, but analysts said consumer demand was still hot enough to warrant an interest rate rise.

But the slowdown appeared to be a blip and not indicative of a trend, analysts said.

"The strength in the manufacturing index was the key factor in the robust industrial output readings," said Indranil Pan, chief economist at Kotak Mahindra Bank.

According to the Index of Industrial Production data, the manufacturing sector posted a high growth rate of 11.1 per cent in August this year, as compared with 8.5 per cent in the same month last year.

However, power generation and mining production continued to disappoint. Mining registered a decline of 0.1 per cent as compared with a negative 2.5 per cent last year, while power generation grew slower at 3.7 per cent, as compared with 7.9 per cent last year.

On a cumulative basis during April-August 2006-07, manufacturing shot up by 11.8 per cent, as against 9.6 per cent last fiscal. Growth in mining was also better at 3.1 per cent, as against 1.6 per cent in the first five months of 2005-06.

The electricity sector has posted growth of 5.7 per cent so far this fiscal, slightly lower than the 6.0 per cent in April-August 2005, according to data released by the Central Statistical Organisation.