India industrial output up 4.1%, below forecast

India's industrial output rose by a weaker than expected 4.1 percent in August, official data showed on Wednesday, underlining the slowing of Asia's third-largest economy. The figures suggested India's economy, hit by a dozen interest rate hikes in 18 months and a gloomy global outlook, may be losing traction faster than anticipated due to aggressive monetary tightening.

The 4.1 percent August rise in output from India's factories, mines and utilities was lower than the 4.5 percent growth in the same month last year and undershot financial market expectations of five percent expansion.

"The August figure was very weak," said Glenn Levine, senior economist at Moody's Analytics. "This underscores the downside risks facing the Indian economy. India's second-half slowdown may be steeper than anticipated." Finance Minister Pranab Mukherjee called the data "disappointing". August's industrial output performance, however, was marginally better than July's revised 3.8 percent rise.

Central bankers worldwide have been reducing lending costs to boost their economies and to shelter them from global financial turmoil. But the Reserve Bank of India, which has already raised rates 12 times since March 2010 - the fastest pace of increases in the institution's 75-year history - is under pressure to lift rates further. AFP