Indian
industrial output rebounded in May from a contraction after the central bank
cut interest
rates earlier in the year to bolster a weakening economy.
Production
at factories, utilities and mines rose 2.4 percent
from a year earlier, after a revised 0.9 percent
decline in April, the Central
Statistical Office said in a statement in New Delhi on 12 July.
Factory
output has been subdued in India for most of this year as Europe’s debt crisis
saps demand for Asian exports and price rises crimp spending at home. The Reserve Bank
of India left borrowing costs unchanged in June after a cut in April, and has signaled inflation above 7.5 percent
limits scope to join neighbors from China to South
Korea in easing policy this month.
The
rupee has slumped about 20 percent against the dollar
in the past 12 months as Indian economic expansion slowed to a nine-year low.
The currency strengthened 0.1 percent to 55.595 per
dollar in Mumbai. The BSE India
Sensitive Index (SENSEX) slipped 1 percent,
while the yield on the 8.15 percent government bond
due in June 2022 declined to 8.13 percent from 8.14 percent on 11 July.
Indian
inflation probably climbed to 7.61 percent last month
from 7.55 percent in May according to the median
estimate in a News survey ahead of a report on wholesale prices next week. That
would be the fastest pace among the biggest emerging economies, stoked by
costlier imports, climbing food prices and bottlenecks in the economy.
Cooling
growth, intensifying price pressures, fiscal and trade deficits and uncertainty
over tax changes have added pressure on Prime Minister Manmohan Singh’s government to overhaul policies and
support the expansion in Asia’s third-largest economy.
His
efforts to open up the nation to more investment have been hampered by
infighting in the ruling coalition and corruption scandals.
Some
companies still see long-term potential in India. Swedish furniture retailer
IKEA said last month it wants to open stores in the nation and may invest as
much as 1.5 billion euros ($1.8 billion). Montek Singh Ahluwalia,
deputy chairman of India’s planning commission, has said India remains capable
of achieving as much as 8.5 percent annual growth.
Officials
across the globe are stepping up efforts to protect their economies. The Bank of Korea,
the People’s Bank of China, the European
Central Bank and the Bank of
England all eased monetary policy this month.
Reserve
Bank Governor Duvvuri Subbarao
next reviews borrowing costs on July 31. He cut the benchmark repurchase rate
by 0.5 percentage point to 8 percent in April. Gross
domestic product rose 5.3 percent in the three months
through March from a year earlier, the weakest pace since 2003.