India industrial growth crashes into negative terrain

NEW DELHI, December 12, 2008 (AFP) – India’s industrial growth unexpectedly shrank for the first time in 15 years, data showed Friday, hit by the widening global recession that has weakened demand in Asia’s third-largest economy.

Industrial production contracted by 0.4 percent in October after expanding by 12.
2 percent in the same month a year earlier, government figures showed. Output grew by a revised 5.45 percent in September.

Industrial production has been falling in Asia’s third-largest economy as a result of the worldwide economic downturn but analysts had been expecting output growth in October of at least two percent.

“The industrial sector and indeed the economy as a whole has been softening for some time and the situation is deteriorating more rapidly now,” said HSBC economist Robert Prior-Wandesforde.

Until recently India believed it would escape the brunt of the global financial turmoil thanks to its vast domestic market of more than 1.
1 billion people and relatively small exposure to world trade.

But a slew of data has shown its economy fast losing steam.

Output turned negative as Indian companies worked off inventories built up in anticipation of October’s normally free-spending religio