India output, inflation rate down

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(Agencies)
Updated: 2009-02-13 07:52

India's industrial production fell the most since 1993 and inflation slowed to the lowest in a year, intensifying pressure on policy makers to add to interest-rate and tax cuts to revive a weakening economy. Bonds rose.

Output at factories, utilities and mines dropped 2 percent from a year earlier after a revised 1.7 percent gain in November, the government said today. Inflation slowed to 4.39 percent in the week to Jan 31.

Renault SA, France's second-largest carmaker, today said it may pull out of a factory project in India as consumer demand diminishes. Waning demand and job losses may prompt Prime Minister Manmohan Singh, seeking re-election before May, to boost spending in next week's interim budget to help protect India from the world's worst financial crisis since World War II.

"The situation is grim and we need some solid support from the government to revive demand significantly," said Dilip Chenoy, director general of the Society of Indian Automobile Manufacturers. "We would like the central bank to cut rates further to stimulate demand for automobiles."

The global recession is hurting manufacturing companies across Asia. South Korea's production plunged by a record 18.6 percent in December. China's industrial output grew 5.7 percent in the same month, close to the weakest pace in almost a decade. India's overseas shipments fell 22 percent in January from a year earlier, the fourth straight monthly decline, according to Trade Secretary Gopal K. Pillai.