India's manufacturing output rose the most in seven months in December as exports rebounded and government stimulus stoked domestic demand for consumer goods.
Faster economic growth may enable Indian policymakers to start reversing emergency stimulus measures taken last year to prop up growth in Asia's third-biggest economy.
"Concerns that growth in India's manufacturing sector was taking a decisive turn for the worse should be allayed by this impressive release," said Robert Prior-Wandesforde, senior Asia economist at HSBC Holdings in Singapore. "External demand is also playing an increasingly important role in driving output gains."
Recent economic data indicate the recovery is gaining traction. Exports rose 18.2 per cent in November to $13.2 billion (Dh48.48 billion), the first increase in 14 months, and industrial output growth accelerated to 10.3 per cent in October.
Prime Minister Manmohan Singh's government and the central bank injected fiscal and monetary stimulus of more than 12 per cent of gross domestic product between September 2008 and April 2009.
That helped the economy grow 7.9 per cent in the three months to September 30, the fastest pace in more than a year.
Gain
India may grow as much as eight per cent in the year ending March 31, Finance Minister Pranab Mukherjee said on December 23.
The prospect of faster economic expansion helped the Sensitive Index of stocks gain 81 per cent in 2009, the biggest annual increase in 18 years.
