New Delhi, March 12 (IANS) India's industrial production rose 16.7 percent in January from 1 percent a year earlier, buoyed by continued growth of the manufacturing sector and a low base effect, official data showed Friday.

The output was a better-than-expected 16.8 percent in December 2009. In January 2009, the figure stood at just 1 percent.

The index of industrial production (IIP), which measures the country's factory output, stood at 9.6 percent in the first 10 months (April-January 2009-10) this fiscal, against 3.3 percent in the same period of 2009, data released by the Central Statistical Organisation showed.

The December industrial output was revised up to 17.6 percent from 16.8 percent record growth.

Manufacturing, which has around 80 percent weight in the index, was up 17.9 percent in January, from 1 percent a year earlier. Mining generation grew 14.6 percent from 0.7 percent in the same period last year. Power output went up 5.6 percent in the period under review.

The consumer durables sector expanded 31.6 percent, the data showed.

'The strong figures in industrial production for January 2010 has been primarily contributed by manufacturing sectors. Capital goods and consumer durables led the higher growth trajectory of industrial output,' said Chandrajit Banerjee, director general of the Confederation of Indian Industry (CII).

The Federation of Indian Chambers of Commerce and Industry (FICCI) said the mining sector's growth of 14.6 percent in January showed that manufacturing activities were growing robustly.

'The derived demand for metal from the manufacturing sector must have pushed up the pace of growth in mining sector. Strong performance of manufacturing harbours the potential to spread to the rest of the industrial economy,' said Amit Mitra, FICCI's secretary general.

Finance Minister Pranab Mukherjee has raised farm gate duties by 2 percent, partially rolling back the 4 percent cut he made at the height of the financial crisis, saying signs of industrial recovery were now evident.

Industry analysts believe the sustained rise in industrial production could bolster the Reserve Bank to move further away from an easy credit policy adopted as part of the monetary stimulus, something that its Governor D. Subbarao has hinted in the past.

'Any increase in policy rates at this time will be counter productive to industrial recovery where a significant portion of the sector are small and medium enterprises,' said Banerjee.

'It is also worth noting that the performance of some of the labour intensive sectors such as jute and leather are still worrisome,' he said.