India's industrial production increased at a significantly slower rate in February, but defied economists' forecast for a contraction, putting pressure on the central bank to lower interest rates further as the economy is struggling to return to a high-growth trajectory, latest data showed Tuesday.
Meanwhile, consumer price inflation in Asia's third largest economy weakened modestly for the first time in six months in March, but remained relatively high, diminishing the scope for further policy easing.
Industrial production increased 0.6 percent on an annual basis, notably slower than January's 2.4 percent gain, the Central Statistics Office said. Economists had forecast a 1.2 percent decrease for February.
Driving the slowdown in overall growth, electricity production fell 3.2 percent annually, and mining output plunged 8.1 percent. Meanwhile, there was a 2.2 percent gain in manufacturing production.
In terms of industries, thirteen out of the twenty two industry groups in the manufacturing sector have shown positive growth during the month, the agency said.
Among sub-sectors, output of basic goods declined 1.8 percent from a year earlier, and intermediate goods production dropped 0.7 percent. Production of investment goods, meanwhile, advanced 9.5 percent, and consumer goods recorded a 0.5 percent gain.
In the April 2012-February 2013 period, industrial output increased 0.9 percent from the corresponding period a year earlier, with output in the manufacturing sector and electricity sector growing 1 percent and 4 percent respectively, data showed.
Separately, the statistical office said retail inflation based on the consumer price index eased to 10.39 percent in March from 10.91 percent in February, marking the first deceleration in six months.
This week also saw some downbeat figures from the automobile manufacturing sector. Car sales declined for the first time in a decade during the financial year ended March 31, figures from the industry body SIAM showed on Wednesday.
Underscoring the sluggish industrial activity, the purchasing mangers' survey for March had shown that India's manufacturing growth was the slowest in sixteen months as weakness in new orders and power outages continued to hamper production.
Earlier this month, data released by the Commerce Ministry showed that India's infrastructure output declined in February as production of natural gas and coal decreased notably from the previous year. Output of eight core industries dropped 2.5 percent annually, reversing January's 3.1 percent increase.
The Reserve Bank of India at its latest rate-setting session lowered the key interest rates by a quarter point to 7.5 percent, saying that inflation remains at a level that is not conducive for sustained economic growth and revival of investment is the key to boost growth. The bank is set to hold its next policy session early May.
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