Industrial output contracts for third straight month in December

NEW DELHI (Reuters) - India's industrial production shrunk for the third straight month in December, dragged down by weak investment and consumer demand and pointing to continued sluggishness in Asia's third-largest economy.

Industrial output fell 0.6 percent in December from a year earlier, after contracting a revised 1.3 percent in November, data from the federal statistics ministry showed on Wednesday.

Analysts polled by Reuters had forecast a contraction of 1.0 percent in the industrial output.

The manufacturing sector, which constitutes about 76 percent of industrial production, contracted 1.6 percent from a year earlier.

Capital goods production, a barometer for investments in the economy, fell an annual 3.0 percent in December, compared with a 0.3 percent provisional growth in the previous month.

India last week cut its estimate of annual growth for the current fiscal year ending in March to 4.9 percent from 5 percent because of a contraction in the manufacturing and mining sectors.

The weak output data will do little to help the Congress party-led ruling alliance, which faces an uphill battle in a general election due by May.

(Reporting by Rajesh Kumar Singh; editing by Malini Menon)