Dec industrial output seen up 12 pct y/y

A labourer works inside a steel factory in Kanpur in this July 20, 2009 file photo.

REUTERS FORECAST: Industrial output to rise 12 percent in December from a year earlier, the median forecast in a poll of 21 economists shows. That is marginally higher than an annual rise of 11.7 percent in November.

Forecasts ranged from a rise of 9.94 percent to 14 percent.

FACTORS TO WATCH: Manufacturing, on the back of strong consumer demand on tax concessions and easier credit, is expected to continue to propel output growth. An exports revival since last November is also expected to underpin growth momentum in factory output.

MARKET IMPACT: A strong rise would reinforce investors' view the economy, which is expected to grow 7.2 percent this fiscal year from a six-year low last year, is on a firm footing.

A robust figure, ahead of the Feb. 26 annual budget, would also allow the federal government, fighting a 16-year high fiscal deficit, to cut the deficit by phasing out fiscal stimulus.

A strong rise would help the central bank to focus better on containing inflation by raising interest rates in coming months.

(Reporting by Rajesh Kumar Singh; editing by Malini Menon and Jan Dahinten)

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