India Industrial Output Grew 4.1% in August

India’s industrial output growth for August fell below the projected 4.5% due in part to the government’s efforts at cooling inflation with 12 interest-rate hikes since March 2010.

But the growth rate in output from factories, mines and utilities picked up steam from the 3.3% posted for July, the slowest growth in three years, according to the Central Statistical Organization. Financial analysts had been expecting five percent growth.

The latest result may undercut the government’s 8% growth projection for the current fiscal year which will end in March 2012. Export orders have been contracting due to weaker demand amid global uncertainty, and some economists have revised the growth estimate for the year down to the seven percent range.

At the start of the year the government had projected 9 percent growth. On Tuesday Minister Manmohan Singh forecast growth of “close to eight percent.” In the last fiscal year ending March 2011 India’s economy had grown 8.5 percent.

Inflation continues to be a problem, and most analysts expect at least one more interest rate hike later this month. Rising prices have become a source of growing unrest. Three-quarters of Indians live on less than $2 a day, according to the World Bank.