New Delhi: India's industrial output posted its weakest growth in six years in March, setting off speculation about the Reserve Bank of India (RBI) holding off additional tightening in the inflation battle.

According to official data, India's industrial production grew three per cent in March, as compared to a year ago, and was well below February's 8.6-per cent growth. It was also just under half of the market forecast of 6.2 per cent, and was the smallest annual increase since February 2002, when it grew 2.4 per cent.

A tighter monetary policy and a stronger rupee trimmed demand, resulting in lower output growth from the double-digit levels seen last year.

Given the official March data, analysts have started to trim their growth forecasts for the Indian economy to around 7.5 per cent for the current fiscal, which is almost one per cent below RBI's estimate of around 8.5 per cent. However, they do say that weaker growth should take some of the pressure off from the government to get prices under control in its inflation battle, specially with respect to food and energy costs.

After the data was released, the Indian rupee fell below the rate of Rs42 to the dollar, a first since April 2007. The rupee has been under sustained pressure from record high oil prices in the $120 plus range, and a weakening stock market. The manufacturing, mining and electricity sectors have taken a hit, which has taken both analysts and the Congress-led coalition government that is bracing for a general election next year.