India industrial output rises less than expected

Labourers work on heavy machinery at the in Gujarat state - 28 October 2010 High interest rates and global economic uncertainty have squeezed growth in India's economy

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India's industrial production rose less than expected in February, at 4.1% from a year earlier, the government says.

Analysts had expected growth of at least 6.6%.

Growth was dampened by a weakness in demand for consumer goods and exports and high interest rates.

January's figure was revised from 6.8% to 1.14%, with a data error blamed, leading to expectations that the central bank might lower interest rates for the first time in three years.

The Reserve Bank of India is due to review its rates next week and has already signalled that it may lower them by 25 basis points to 8.25%.

The Indian economy grew by 6.9% in the financial year that ended on 31 March, its slowest rate in three years, under pressure from international economic uncertainty, high interest rates at home and a high rate of inflation.

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