According to government data released on Friday, the growth in output from mines, utilities, and factories was only 0.5 percent year-on-year, much lower than expected. This was a significant drop from the 3.9 percent increase seen in June. Output growth had reached a 19-month high of 5.0 percent in May. Retail inflation also decreased slightly to 7.8 percent in August from 7.96 percent in July, mainly due to slower price increases in fuel and clothing. These numbers come after the economy experienced its fastest growth in 2-1/2 years in the quarter ending in June, with Prime Minister Narendra Modi highlighting the positive sentiment behind India's recovery. However, high inflation could make it challenging for Modi to encourage Indian consumers, who drive a significant portion of the economy, to increase spending. The Reserve Bank of India may also be cautious about lowering interest rates later this month due to inflation concerns. Despite some positive factors like better rainfall and falling global crude prices, it is expected that interest rates will remain unchanged when the RBI reviews them on September 30. Upasna Bhardwaj, an economist at ING Vysya Bank, believes that the RBI will likely keep its policy rate steady through March 2015, with a possible adjustment next year. Modi's strong electoral mandate in May has led to increased investor optimism and foreign investment in Indian equities. However, to maintain this positive momentum, economists suggest that Modi needs to address issues such as public finances, land acquisition laws, tax regulations, and labor rules. Failure to make these reforms could hinder the economy, which is still struggling with low consumption and weak business investment. In July, there was a 7.4 percent annual decrease in production, with firms being hesitant to make new investments. Capital goods production also dropped by 3.8 percent compared to the previous year. Rohini Malkani, an analyst at Citi, mentioned that while the pro-business government has improved the investment climate and boosted confidence, more efforts are needed to return to a period of high growth and low inflation. The images show workers in a boiler spare parts manufacturing workshop in Kolkata and a steel factory in Jammu.