India's industrial output rose 7.3 percent in the year through June, compared with 6.2 percent growth a month earlier, due to robust consumer demand but analysts said the strong growth momentum was likely to taper off.
They said the impact of poor monsoon rains in July would be felt in the months ahead as the current data did not reflect the impact of this year's erratic monsoon rains on demand.
"The June numbers are good but do not reflect the reality," said Rajeev Malik, economist at J.P. Morgan in Singapore.
"The momentum is unlikely to be sustained and we will get clear evidence of slowing down by the end of the September quarter."
India's industrial production has accelerated over the past year, with recent months consistently logging growth of over five percent from a year earlier, but the delay in the monsoon rains in July has forced analysts to clip their growth forecasts.
Most analysts have cut their expectations for economic expansion in the year through March 2005 to 5.5-6.5 percent from pre-monsoon views of 7.0-8.0 percent.
Data released by the state-run the Central Statistical Organisation on Thursday showed the manufacturing sector, which forms more than 75 percent of industrial output, rose 8.0 percent in June from a year earlier. Consumer durables grew 14.1 percent in June, compared with 0.3 percent in the year to June 2003.
"The manufacturing sector growth is strong and so far the core manufacturing has displayed growth of around 11 percent," said Dhananjay Sinha, economist at ICICI Bank in Bombay.
The capital goods sector, which reflects the level of industrial activity, was 17.5 percent higher in June compared with 10.9 percent in the year-ago period.
Industrial output was 5.7 percent higher in June 2003 while in the year to June 2003, industrial production grew 6.7 percent. India does not release seasonally adjusted data.
Consumer demand has been up since last year's monsoon rains, which were the best in a decade. Good rains boost rural demand as nearly 600 million Indians earn a living off the land and a bad harvest leads to a dip in their incomes.
The south-west monsoon, which has an overwhelming influence on the Indian economy, began on schedule but vanished in the crucial sowing month of July, which is expected to impact farm output. The rains revived in the first week of August.