Industrial output rose by 3.7% year on year in January, up from an upwardly revised 2.5% expansion in December. The reading was the strongest for three months. However, output grew at less than one-half of the pace of 8.3% recorded between April 2010 and January 2011. That said, the figure for January understates the momentum of India's industrial economy, as this growth follows a very rapid rate of expansion in the year-earlier period, at 16.8%.

Manufacturing production rose by 3.3% year on year in January, while mining output grew by 1.6%. Electricity output, which increased by 10.3%, grew twice year on year as fast as it did between April 2010 and January 2011. However, concerns about the strength of the industrial economy persist. Capital goods production fell by 18.6% year on year in January, suggesting a slowdown in investment demand. As has been the case throughout 2010/11, production of consumer durables surged, rising by 23.3%. Output of consumer non-durables, which has been almost flat in recent months, grew by 6.9%.