India's industrial output slows once again

MUMBAI, India (AP) India's industrial production in August rose 0.6 percent from a year earlier, a significant slowing from the previous month's numbers, the government said Friday.

The weak output is another sign that Asia's third-largest economy is still sputtering.

Most of the gains were due to strong growth of 7.2 percent in the electricity sector compared to the previous August. Mining was down by 0.2 percent and manufacturing dropped 0.1 percent in the numbers released by the Central Statistics Office.

Last month's index of industrial production showed overall gains of 2.6 percent, sparking small hope that India's economy might have bottomed out.

Stalling growth that reached a decade-low this year has marred India's economic outlook, while high inflation leaves little room for the central bank to boost demand by cutting interest rates.

The economy expanded 4.4 percent in the April-June quarter, far below the average of 8 percent growth of just a few years ago.

The new Reserve Bank of India governor, Raghuram Rajan, has declared containing inflation which badly hurts the hundreds of millions of Indians who scrape by on less than $2 per day his top priority. He surprised many last month when he hiked the benchmark interest rate rather than cut it, as many business leaders had hoped.

Rajan has said that the government, not just the central bank, must play a role in reviving the economy by making it easier to do business in India, improving infrastructure, easing regulations that slow down investment, reducing subsidies for fuel and reining in deficits in the national budget and current account.