India's industrial production fell the most in 16 years in March as demand for its exports slumped.
Output at factories, utilities and mines fell 2.3 percent year on year after a revised drop of 0.7 percent in February, the Central Statistical Organisation said yesterday. It was the worst performance since January 1993.
Bonds rose on speculation that the central bank will cut borrowing costs from a record low to spur growth, although six rate cuts since last October and increased government spending worth 7 percent of gross domestic product may already be bearing fruit.
Last month, manufacturing rebounded as domestic demand picked up. ABN Amro said last week that its purchasing managers' index rose to 53.3 in April from 49.5 in March, indicating a gain in factory output.
"We should be within one to two months of the bottom in industrial activity," said Philip Wyatt, a senior economist at UBS in Hong Kong. "The pace of economic growth remains weak, but lead economic indicators point to a turnaround."
Output was dragged down in March by an 8.2 percent drop in capital goods production, with all other categories showing improvement from February. Consumer durables production jumped 8.3 percent year on year.
Cement production leapt an annual 10.1 percent in March and electricity generation rose 5.9 percent, official data showed, while car sales increased 4.2 percent in April.
Exports remain weak, with Indian shipments declining at an annual pace of 33 percent in March.
Source : Business Report