New Delhi: India’s annual industrial output growth probably surged in October on robust consumer demand and government spending, but is unlikely to change the central bank’s near-term monetary stance.

The median forecast in a Reuters poll of 21 analysts was for industrial output to have risen an annual 10.3%, accelerating from a provisional 9.1% rise in September.

“Strong consumer demand and capital goods sector are likely to be growth drivers in October." said Madan Sabnavis, chief economist at a Mumbai-based commodity exchange NCDEX.

Factory output in the year-ago period had crept up 0.1% as the global downturn contracted demand in Asia’s third-largest economy, and the lower base would also help.

Aggressive rate cuts by the central bank and heavy doses of government spending have revived output and the economy grew the fastest in 18 months in the September quarter.

Car sales surged 61% on year in November, highlighting an improvement in consumer confidence.


The strong growth data, along with persistently higher food prices, have stoked expectations of monetary tightening.

Over the weekend, a central banker said growth alone would not determine the monetary stance, but noted that a persistent rise in food prices could raise broader inflationary expectations.

Analysts do not expect Friday’s data to have any immediate impact on the central bank’s policy.

“We still need to see the demand-pull triggers coming in. Inflation’s main cause remains on the supply side," Sabnavis said adding: “So, it may not concern the monetary policy as of now."

On Monday, central bank Governor D. Subbarao said food price inflation was a supply-side issue and monetary policy was an inefficient tool to rein it in.