The country's industrial output grew a robust 11.4 per cent during September on the back of higher electricity generation and manufacturing activity.
This was more than the revised 9.9 per cent growth in August but lower than the decade's highest monthly industrial output of 12.7 per cent recorded in July.
The data prompted comments from analysts that the Reserve Bank of India might opt for an interest rate hike before the next quarterly review of the monetary policy in January.
The central bank had raised its main lending rate, the repo rate, by 25 basis points to 7.25 per cent last week while keeping other policy rates, including its main borrowing rate, stable.
"Basically, the strong output means further rate increases are warranted. We had made a call that the rates may be raised again in the January review, but the central bank's previous policy statement indicates increased risk of an inter-meeting hike," said Rajeev Malik, economist with JP Morgan in Singapore.
"The numbers are higher than our expectations and it indicates the underlying momentum on the manufacturing front," said Indranil Pan, chief economist at Kotak Mahindra Bank.
Data on inflation at 5.09 per cent for the last week of October over 5.41 per cent the week before also released today show that inflation continues to be higher than the government target, but between the RBI's target 5-5.5 per cent.
The industrial output data show that manufacturing, which makes up more than 75 per cent of industrial output, grew by 12 per cent in September while electricity generation rose 11.3 per cent. Mining output grew by just 3.9 per cent during the month.
The cumulative growth for April-September this financial year stood at 10.9 per cent, compared with 8.5 per cent in the corresponding period of 2005-06. During April-September 2006-07 manufacturing grew by 12.1 per cent, electricity by 6.6 per cent and mining by 3.1 per cent.
