New Delhi (AP) – India’s industrial production rose 11.4 percent in September, boosting growth for the first half of the fiscal year to 10.9 percent, the government said Friday in a report that indicated momentum is building in the economy.
India has averaged 8.1 percent annual economic growth over the past three years, making it one of the fastest-growing economies in the world.
The growth in industrial production in September came amid sustained domestic demand and a surge in exports, despite rising oil prices that added to inflation and prompted banks to raise interest rates.
Among industries, manufacturing output grew 12 percent in September compared with 8.9 percent in the same month a year ago. Mining production expanded 3.9 percent in September from last year, while electricity generation was up 11.4 percent.
The growth numbers beat expectations of analysts, who had projected industrial output to expand at a rate of nearly 10 percent in September.
Still, some experts said industrial activity could slow in coming months.
A moderation in external demand and rising interest rates could depress growth numbers in the remaining quarters despite an increase in investment spending, said Rajeev Malik, a JP Morgan economist based in Singapore. Consumer spending may also soften, Malik said.
The acceleration during the April-September period was driven by both a surge in exports as well as domestic demand.
Rising middle class incomes have boosted consumer spending on goods such as cars, phones and television sets and encouraged companies to invest in new projects.
Car sales, for example, increased 23 percent in the first half of the current year, while India overtook China in September in adding new mobile phone subscribers – a record 6 million in that month.
Indian companies are also becoming increasingly competitive in the global market. Exports totaled $59.3 billion, up 23 percent on year.
The growth in industrial output, coupled with prospects of a good agricultural harvest because of timely rains, will likely help the broader economy maintain the momentum seen in recent years.
Last month, India’s central bank raised its economic growth forecast to 8 percent from an earlier projection of 7.5 percent.