New Delhi (AP) — India’s industrial production expanded 12.4 percent in July from a year ago, thanks to strong domestic demand and exports, the government said Tuesday.
The estimates surpassed expectations. Analysts polled by Dow Jones Newswires expected industrial output to grow 11.5 percent in July.
The growth came on the back of sustained domestic demand and a surge in exports, although many had feared rising oil prices and interest rates could slow the economy.
The acceleration seen in July — industrial output expanded 9.6 percent in June — was also attributed to a low base in the same month a year ago.
Among industries, manufacturing output grew 13.3 percent in July compared with 6 percent in the same month a year ago. Mining production expanded 6 percent, while electricity generation was up 8.6 percent. Both mining and electricity generation had seen a contraction in July last year.
For the April-July period, manufacturing growth averaged 11.8 percent.
The new data prompted some analysts to revise their forecasts for the broader economy.
“We have increased our GDP projection for the current year to 7.8 percent from 7.6 percent earlier,” said Shubhada Rao, an economist at Yes Bank.
India’s gross domestic product has grown 8 percent annually over the past three years.
Rising middle class incomes have boosted sales of products like cars and telephones in India, prompting most companies to expand capacity. For instance, domestic car sales rose 23 percent during the April-July period.
Higher capital spending and the ongoing expenditure on infrastructure will continue to have a positive effect on industrial production, said Rajeev Malik, an economist with JPMorgan Chase Bank in Singapore.
However, “higher interest rates, softening in retail demand and moderation in external demand will cause industrial activity to moderate slightly” in the coming months, he said.