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Wednesday, December 12, 2007

India Industrial Output October 2007

India's industrial production grew more than analysts predicted in October as the onset of the festival season and rising incomes seem to have spurred consumer spending. Production at factories, utilities and mines increased 11.8 percent from a year ago, up from September's revised 6.8 percent rise, the statistics office said in New Delhi today.

Consumer spending got a boost in October as India's 830 million Hindus prepared to celebrate the Deepawali festival of lights and the nation's 140 million Muslims observed Id-Ul-Fitr, which marks the end of the fasting month of Ramadam. Demand for cars, mobile phones and other manufactured products rose as companies offered bonuses before the festivities.

Company sales in India get a fillip in the festive months of October and November as people consider it an auspicious time to make purchases. Deepawali, the most important festival on the Hindu calendar, fell on Nov. 9 this year and Dusshera was on Oct. 21. Muslims celebrated Id-Ul-Fitr on Oct. 14.

Manufacturing, which accounts for 80 percent of industrial output, gained 13.3 percent in October from a year earlier, according to today's statement. That was the quickest pace since March. Consumer-goods production jumped 12.5 percent, the most in six months.

Also Indians received the second-highest salary increase in the Asia- Pacific region this year, helped by the unprecedented economic growth. Wages rose an average 14.8 percent in 2007 from 14.4 percent last year, according to human-resources consulting firm Hewitt Associates Inc.

Accelerating industrial growth, which makes up a quarter of the $906 billion economy, has helped the benchmark Sensitive Index to soar 47 percent this year.

Local sales of passenger cars in October rose 14.6 percent from a year earlier to 105,878 units, the New Delhi-based Society of Indian Automobile Manufacturers have said. S

Honda Motor Co., Volkswagen AG and half a dozen other companies plan to spend at least $6.6 billion in India on new factories to cash in on rising auto demand. GM is spending more than $300 million to build a second car factory in India.

The Reserve Bank of India has lifted its benchmark interest rate nine times since October 2004 in an attempt to fight inflation, making commercial bank loans more expensive.

Sustaining high industrial production growth will require the creation of supportive infrastructure, Finance Minister Palaniappan Chidambaram said in a mid-year review of the economy last week. The government estimates India will need $500 billion worth of investments in the next five years to build and upgrade its roads, ports, airports and utilities if it wants to accelerate growth to a 10 percent pace by 2012.

India's gross domestic product has expanded at an average annual pace of more than 9 percent since April 2005, making it the world's second-fastest growing major economy after China. India's economic growth, currently the world's fastest after China, is constrained by the lack of skilled manpower and inadequate infrastructure, Prime Minister Manmohan Singh said in New Delhi earlier today.

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