POLL - Sept industrial output seen up 7.3 pct y/y

By Rajkumar Ray

NEW DELHI (Reuters) - India's annual industrial output growth probably cooled in September but was still robust on festival demand, and analysts said stimulus measures needed to continue next year to make the recovery durable.

The median forecast in a Reuters poll of 22 analysts on Tuesday was for industrial output to have risen 7.3 percent from a year earlier, lower than a provisional 10.4 percent rise in August data.

"Manufacturing growth should be reasonably strong in September. The trend will continue October onwards because economic activities had slowed last year after the global financial crisis," said Aditi Nayar, senior analyst at rating agency ICRA.

Robust retail sales leading up to the festival season in September, the second instalment of back-pay to government employees and lower duty rates have contributed to a revival in demand, she said.

Growth in industrial output slowed to 2.6 percent in 2008/09 (April/March) from 8.5 percent in the previous year as high interest rates and then the global slump hit manufacturers in Asia's third-largest economy.

But aggressive rate reductions by the central bank coupled with tax cuts and heavy doses of government spending helped revive output from the beginning of this year.

For a graphic on impact of stimulus on factory output, click here