This is a real slowdown and the reasons for this and the consequences need to be thought about and analysed carefully. The increase is less than half what India has averaged in the past year. Prime Minister Manmohan Singh this week formed a panel to suggest measures to boost the nation's industrial output.
Manufacturing output rose 5.4 percent in November from a year earlier, the weakest pace since October 2006, according to today's statement. Production of consumer goods such as cars and refrigerators fell 2.6 percent, while mining output gained 3.5 percent and electricity production rose 5.8 percent.
The yield on the benchmark 10-year government securities fell 4 basis points to 7.53 percent at 12:15 p.m. in Mumbai as the bonds headed for the biggest weekly advance in almost a year. The benchmark stock index pared gains from the day's high, rising 0.8 percent to 20751.22 on the Bombay Stock Exchange.
The Reserve Bank of India has raised interest rates nine times since 2004 and ordered commercial lenders to set aside more funds as reserves five times in the past year to contain inflation below its target of 5 percent.
Inflation was unchanged at about 3.5 percent in the week ended Dec. 29, down from 6.7percent at the start of 2007.
India's central bank is next scheduled to set interest rates at a meeting on Jan. 29.
Growth in passenger car sales halved to 8.8 percent in December. Cement production in November rose 4.5 percent from a year earlier after growth of 7 percent in October. ACC Ltd., India's biggest cement maker by capacity, said sales declined 6 percent last month. India's $906 billion economy expanded 8.9 percent in the three months to Sept. 30 from a year earlier, the slowest pace in three quarters. Manufacturing increased the least in almost two years.
