Industrial output grows 15.1 per cent in February

India's industrial output grew 15.1 per cent on year in February, slowing from a 16.7 per cent rise in the previous month but exceeding 15 per cent for the third successive month, according to data released by the Central Statistical Office today.

Manufacturing output, which has an 80 per cent weightage in the industrial output index, rose 16 per cent in February, compared with just 0.2 per cent in the same month a year earlier.

The growth was fuelled largely by increased demand for cars and television sets, adding to inflationary pressures that are widely expected to prompt the Reserve Bank of India bank to raise interest rates this month.

Output at factories, utilities and mines expanded 15.1 per cent from a year earlier in February after growing 16.7 per cent the previous month, the statistics department said in a statement in New Delhi. Mining increased 12.2 per cent, today's report showed, while electricity output rose 6.7 per cent.

Factory output and consumer demand has recovered across Asia after governments boosted spending to stimulate their economies during last year's global recession. That has prompted central banks from Australia to Malaysia to raise interest rates to fight inflation and avert asset bubbles, with the Reserve Bank of India raising borrowing costs on 19 March.

''Today's growth rate is definitely much higher than what we had thought when we took all the accommodative measures,'' Indranil Pan, chief economist at Mumbai-based Kotak Mahindra Bank Ltd, told Bloomberg before the report was released. He expects RBI to raise interest rates by 1 percentage point by the end of the financial year in March 2011, starting with the next monetary policy review on 20 April.