India's Sept Industrial Output Seen Up 9.9%

NEW DELHI: India's industrial output in September is forecast to have grown 9.9 per cent from a year earlier, easing from the previous month and adding to expectations that official interest rates have peaked.

The median forecast of 10 analysts in a poll put annual growth below the robust 10.7 percent in August.

"Manufacturing should be strong but it will be slower than (the) previous year. I expect growth to be in this region as the festival season kicks in," said Riyaz Khan, economist with the Centre for Monitoring Indian Economy.

Policy makers expect a spate of Hindu and Muslim festivals to boost demand into the end of the year, as people traditionally splurge on consumer goods at this time. So far, growth has been dampened by a series of interest rate rises which have slowed demand for automobiles, real estate and some consumer durables.

Automobile sales between April and October fell 5 percent to 5.6 million units, as high interest rates hit demand for motorcycles and commercial vehicles, data from the Society of Indian Automobile Manufacturers showed.

The central bank has raised interest rates five times since June last year, bumping up those on vehicle loans by 250-350 basis points. Further, the rupee has risen 12.5 percent against the dollar this year, more than any other Asian currency, putting pressure on exports and weighing on the manufacturing sector, which accounts for 15 percent of gross domestic product.

The central bank and the government expect economic growth to moderate to 8.5 per cent in 2007/08 from 9.4 percent in 2006/07. The following table shows forecasts for September industrial output.