India's Industrial Output Growth Slows

MUMBAI, India (AP) -- India's industrial output slowed in May while still sustaining a double-digit rate of growth for an eighth consecutive month, government figures showed Monday.

Industrial production grew 11.5 percent from a year earlier compared with a 17.6 increase in April, the Ministry of Statistics said, as Asia's third-largest economy returns to pre-financial crisis levels of growth.

The extremely high growth rate of the previous few months was not a sustainable level for the country, said D.K. Joshi, chief economist at Crisil, a research and ratings agency.

Part of the reason for the rapid growth was that industrial production in the previous year had been weakened by the global recession creating a low base for comparison, he said. The nation's industrial production only rose 2.1 percent last year in May.

"Sustainable industrial growth is around nine to 10 percent under a normal circumstance," Joshi said. For the fiscal year that began April, he estimates average industrial growth would likely be around nine percent.

Manufacturing output rose 12.3 percent in May, mining increased 8.7 percent and electricity 6.4 percent. Capital goods surged 34.3 percent, and production of consumer durables grew 23.7 percent, according to the ministry.

Metal products and parts not including machinery and equipment led growth in the industrial sector, expanding 39.8 percent from a year earlier.

India's economy grew 8.6 percent for the quarter ended March, indicating a strong recovery from the economic downturn.

But inflation has been a persistent concern for India, causing the country's central bank to raise interest rates three times since March.

India's headline inflation rate was 10.2 percent in May. Inflation data for June is expected to be released on Wednesday.

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