Bangalore:
Factory output probably rose for a second consecutive month in May, despite slow growth in core industries, while inflation eased last month, according to a Reuters poll.
The poll of more than 30 economists, conducted during July 1-9, showed industrial output (IIP) expanded 3.8 per cent annually, up for the second straight month after posting a 3.4 per cent rise in April - its first since January.
Production in the country's eight core industries, which make up almost 40 per cent of the IIP, rose an annual 2.3 per cent in May, according to data last week.
None of the economists polled expect a contraction for overall output in May and positive data would be encouraging for Asia's third-largest economy as a manufacturing slowdown dragged economic growth to a decade low of 4.7 per cent in 2013-14.
The government on Thursday unveiled a Budget of structural reforms that seeks to revive growth while keeping a lid on more borrowing.
"The market is building a case for a reformist budget, along with fiscal prudence, for a revival of the economy and investment cycle," said Manish Oswal, securities analyst at K R Choksey, before the Budget was announced.
"We think the budget will signal a fresh leg of capital flows and domestic investments and improve the job market."
Prime Minister Narendra Modi has also made controlling inflation a priority since taking office in May.
Consumer price inflation probably eased to 7.95 per cent last month, down from May's 8.28 per cent, the Reuters poll of economists found.
Wholesale price inflation was forecast to have eased to 5.80 per cent last month, down from a five-month high of 6.01 per cent in May.
But prospects of weak monsoon rains and turmoil in Iraq have increased the risk of rising food and fuel prices.
"The state of monsoon is going to play a major role," said Nitesh Ranjan, chief economist at Union Bank of India.
The Reserve Bank of India - which considers both inflation indicators to make monetary policy decisions - has raised policy rates three times since September.
However, with economic growth at historically low levels, RBI Governor Raghuram Rajan has kept the repo rate on hold since February.
"A sub-normal monsoon scenario puts the ball in the government's court to prevent a rate response by the RBI," Mr Ranjan said.
Copyright @ Thomson Reuters 2013
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