In signs of recovery after a 2-month decline, industrial output in January grew by 2.4 per cent on account of better performance of manufacturing and power sectors.

In view of the fact that it is just a fragile recovery, the Finance Ministry and India Inc sought to impress upon the Reserve Bank to lower interest rates next week to boost industrial growth.

The factory output, as measured by the Index of Industrial Production (IIP) had grown by 1 per cent in January, 2012. It had contracted by 0.8 per cent in November and 0.5 per cent in December.

"Inflation numbers have also come down. So, there is certainly a case for (giving) further impulses for growth," Department of Economic Affairs (DEA) Secretary Arvind Mayaram told reporters here.

RBI has forecast the March-end WPI inflation to be 6.8 per cent. For January, it was 6.62 per cent.

Mayaram said the central bank will take into account various developments and macro economic conditions before taking a view on interest rate at its mid-quarter review of monetary policy on March 19.

Industry chamber CII said that RBI should respond to the fiscal consolidation measures announced in the budget by Finance Minister P Chidambaram and reduce policy rates by at least 50 basis points in its forthcoming policy review.

As per the IIP data, the industrial production has recorded an increase of 1 per cent during the 10-month period (April-January 2012-13), down from 3.4 per cent in the same period of 2011-12.

Meanwhile, the decline in industrial output for December 2012 has been revised slightly upward to 0.5 per cent from a contraction of 0.6 per cent as per provisional estimates released last month.