Indian Rupee
Indian Rupee Reuters

India's industrial output in January grew 6.8 percent from a year earlier, which is the fastest it has seen for the last seven months, according to a statement from the Central Statistical Office.

Manufacturing sector witnessed a growth of 8.5 percent, which was to a large extent responsible for the overall increase.

Last month, it was reported that India's economy grew at 6.1 percent in the October-December quarter, the slowest rate of growth in 11 quarters. This is a major slowdown from the July-September quarter, when growth in gross domestic product was 6.9 percent.

In the April-June quarter, growth was 7.7 percent. The global economic slowdown and the successive increase in interest rate by the Reserve Bank of India have largely affected the growth possibilities of India.

The RBI decided last Friday to cut its cash reserve ratio (CRR) by 75 basis points in a response to continued shortage of liquidity in the banking sector. This move cuts the CRR from 5.5 to 4.75 percent, which came into effect March 10.

The RBI's statement explains that it is intended to head off an escalation of the liquidity shortage in the banking sector in the second week of March due to year-end tax payments.

The industrial output growth, which has turned out to be much better than expected, should be a good news as India's Finance Minister Pranab Mukherjee is getting ready to present the budget to the Parliament March 16.