India Industrial Output December 2007

India's industrial production again in December as record investment in factories, roads and power plants increased demand for cement and steel. Production in factories, utilities and mines rose 7.6 percent over December 2006, after gaining a revised 5.1 percent in November, according to the statistics office in New Delhi today. So it seems that despite the pressure on India's export potential which comes from having a rising rupee, the pace of capital inflows and hence investment means that industrial expansion has a strongish underlying momentum.




Industrial production grew 9 percent in the nine months ended Dec. 31, less than the 11.2 percent gain in the same period in the previous year, the government said. Manufacturing in December rose 8.4 percent, led by a 16.6 percent increase in the output of capital goods such as plant and machinery.

Higher borrowing costs are prompting consumers to postpone purchases. Bajaj Auto Ltd., India's second-largest motorcycle maker, posted a 16 percent drop in sales in January, its 12th straight month of declines.

ABN Amro Bank NV's purchasing managers' index indicated manufacturing growth recovered in December from the previous month and fell again in January to the lowest level since September.

Prime Minister Manmohan Singh's government is spending 1.34 trillion rupees ($34 billion) in the year ending March 31, a 40 percent increase over the previous year, on roads, ports and power plants.

Economic expansion in India is still the second-fastest after China among the world's biggest economies. The economy has grown an average 8.8 percent since 2003, the fastest expansion since the country's independence in 1947.

India's middle class, defined as those with annual disposable incomes between $4,380 and $21,890, has more than doubled to 50 million in the past decade, according to McKinsey & Co., the New York-based consulting firm.